Appraising Kitchens

Newz: FHFA Waiver Expansion, AMC Appraisal Fees, Appraising Kitchens

November 1, 2024

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

  • Construction Progress Inspection Reports: Claims Involving ADUs and Remodels
  • Appraising Kitchens: Understanding Trends, Functionality, and Market Expectations
  • Lake Tahoe Ranch Hits the Market for $188 Million, Making It One of the Priciest Listings in the U.S.
  • FHFA’s Appraisal Waivers Expansion
  • The Great Debate on Appraisal Fees
  • Updated UAD redesign timeline with specific implementation dates
  • Mortgage applications decreased 0.1 percent from one week earlier

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Appraising Kitchens: Understanding Trends, Functionality, and Market Expectations

Excerpts: When it comes to real estate appraising, kitchens often play a pivotal role in determining a home’s value. A well-appointed kitchen can significantly enhance a property’s appeal and marketability. As an appraiser, understanding the nuances of kitchens is essential to providing credible and insightful valuations. Let’s dive into appraising kitchens and how the room impacts market value.

Functional Obsolescence and Price Point

If a back corner kitchen or a galley kitchen does not align with current market preferences for homes of a similar age, it might be considered outdated and impact marketability. However, this does not necessarily rise to the level of functional obsolescence that must be remedied. An outdated but functional kitchen might not be a major concern in lower price ranges.

Conversely, in high-end homes, buyers expect the latest designs, features and finishes; and therefore, an outdated kitchen may be considered as functional obsolescence.

Appeal & Functionality Count when Appraising Kitchens

In conclusion, appraising kitchens requires a thoughtful, balanced analysis of market trends, quality, and functionality. While it’s important to understand current design preferences, the value of a kitchen is ultimately determined by how well it meets the expectations of buyers in a particular market.

A homeowner may have invested heavily in a kitchen renovation, but it is the appraiser’s responsibility to carefully consider factors such as conformity, local market preferences, and house style and price range when valuing the subject property. Remember, ultimately a kitchen’s value lies in its ability to enhance the overall appeal and functionality of the home, not its initial cost or the cost of renovation.

To read more, Click Here

My comments: This is the best analysis I have read on kitchens. Worth reading. Kitchens are a very important factor when buying a home. What is popular changes over time. Of course, appraisers see all types of kitchens.

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Lake Tahoe Ranch Hits the Market for $188 Million, Making It One of the Priciest Listings in the U.S.

Excerpts: sprawling Lake Tahoe estate known as Shakespeare Ranch hit the market on Monday for $188 million.

Not only is that a price tag that makes it the most expensive property on the market in Nevada, it’s also one of the priciest in the entire U.S., bested only by a small handful of homes in Los Angeles and South Florida.

Named after the nearby Shakespeare Rock, a nearby outcropping that is said to resemble the playwright, the property spans 130 acres on the eastern shores of Lake Tahoe and includes a colossal selection of amenities, from multiple properties and a historic barn to its own rodeo ground and private pier.

The ranch dates to the late 1800s, and its multiple properties include a 4,980-square-foot lakefront home with a waterside cabana, an under-construction 7,713-square-foot architect-designed residence and a number of cabins.

he historic barn on the property was built in 1873 and is currently outfitted with a commercial kitchen, a game center and a wine room.

The property also has a pool house with an indoor pool and spa, a gym, lawns, gardens, an office suite, a staging kitchen for catering, two boat lifts, 14 buoys and a boat house.

To read more, Click Here

For video, photos, and more information and to see the listing, Click Here

My comments: I live within driving distance to Lake Tahoe and have been there many times. A beach with a dock and a boat house is a premium feature.

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UAD and Forms Redesign Update for Appraisers

UAD and Forms Redesign Update

Excerpts: Improving the Quality and Consistency of Appraisal Data

Freddie Mac and Fannie Mae (the GSEs) have worked on the UAD redesign since 2018, leveraging extensive stakeholder input to update the appraisal dataset, align it with current mortgage industry data standards (MISMO® v3.6), and replace the GSE appraisal forms with a single data-driven, flexible, and dynamic appraisal report for any residential property type.

To watch the Excellent UAD and Forms Redesign Video (3 min. 47 seconds) Click Here

For more detailed information on web page Click Here

My comments: Watch the short video. On the links list on the right side of the webpage, GSE Experts Answer Your UAD Redesign Questions is short and understandable.

The UAD and Appraisers – Past, Present, and Future

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 Non-lender appraisals, handline wide swings in appraisal volume, economic analysis for appraisers, Wells Fargo Mortgage discrimination, unusual homes, mortgage origination stats, etc.

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Quality Adjustments for Appraisers

Quality Adjustment Research and Methodology: The Basics

By McKissock

Excerpt: Quality and condition are not the same. Quality refers to the quality of items, materials, and construction. When making appraisal adjustments, examine the quality of your data and remember that any quality ratings in your county records or MLS are not always reliable. Here are some basic things to consider regarding quality adjustment research and methodology.

Reliability of data

You need to consider: What is this data telling me? How reliable is that data? If you’re using county data, and you’re looking at quality ratings in there, how reliably do they rate properties? Should you even be using that data?

To read more, click here

My comments: The blog post has a link to Quality Ratings. Quality is sometimes difficult to determine on the subject and very tricky on the comps. Another appraisal challenge!

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Appraisal Business Tips 

Humor for Appraisers

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

NOTE: Please scroll down to read the other topics in this long blog post on adapting to changes in appraisal, appraisal volume, unusual homes, mortgage origination stats, etc.

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Fannie Mae: No Appraisals Required? 3-10-23

Fannie Mae: Appraisals are no longer the default option: Value Acceptance replaces Appraisal Waiver

Fannie Mae updated its Selling Guide on March 1 to include more options for property valuations, saying that they are “moving away from implying that an appraisal is a default requirement.”  Those options include value acceptance (formerly appraisal waivers), value acceptance plus property data and hybrid appraisals.

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Fannie Mae – No Appraisals Required – The End of Appraisers?

Hamp Thomas 12 minute video – my favorite commentary on this issue!

Fannie Mae took a direct shot at appraisers today with the announcement of changes in their Selling Guide. Two options for the future, both of which do great harm to the appraisal industry.

First, “third party” inspections. Appraisal trainees aren’t good enough, so now we will have unlicensed inspectors going through the homes of unsuspecting homeowners. And, with this inspection a traditional appraisal is no longer a requirement for the mortgage loan.

Secondly, the 3rd party inspection is sent to a licensed appraiser. FNMA wants an appraiser’s signature so the appraiser can be held responsible if there’s any problem in the future. Both options say they are good for consumers and both options are filled with fabrications and misinformation. At the end of it all, it’s about control and profits. Why trainees can’t provide the data is simply because big banking and AMC’s don’t make profit from the inspection part of the process.

If appraisers don’t stand up and say no, right now, the running joke of the appraisal industry could be gone in five years; well, it just very well may come true. Ok appraisers, it’s time to speak out and stand together.

The only reason for these changes are about a piece of the 11 TRILLION dollar mortgage market. And that’s the way it is – March 1, 2023.

To watch the video, click here

My comments: Worth watching the video. Call to Action. Hamp is an excellent speaker and teacher.

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Fannie Statement: “Value acceptance + property data has arrived”

“This new option reduces cycle times and may reduce borrower costs, promotes safety and soundness by obtaining a current observation of the subject property, and provides operational simplicity and certainty at time of loan application.“

To read what Fannie says, click here

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Link to Fannie SEL-2023-02: Selling Guide Updates PDF

To read more, click here

My comments: Lenders Are Happeeee! Those darn appraisers and appraisals have always taken too much time. Fannie sells their loans to investors. The more loans, the more money Fannie makes. I did not include links to what the happy lenders say. You already know.Clear the Tracks!

Fannie Wants Desktop Appraisals

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 Non-lender appraisals, AMCs, unusual homes, mortgage origination stats, etc.

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What should appraisers look for in a sales contract?

What should appraisers look for in a sales contract?

By Steven W. Vehmeier

Excerpt: When should we analyze the contract?

Looking at the sales contract early on allows the appraiser to identify any “subject to” items or other conditions that could influence the value conclusion.

However, reviewing the contract early might also put the sales price in the back of the appraiser’s mind. And although it shouldn’t, it may unintentionally influence the appraiser’s comparable selection and eventually impact a direction in value.

Maybe looking at the sales contract only after developing the appraiser’s opinion of value would help avoid the above concern?

To read more, click here

My comment: Some interesting, and maybe controversial, ideas. Short and worth reading.

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 unusual homes, AMCs, appraiser survey on the future, real estate market, waivers, turn times,mortgage origination stats, etc.

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Appraisers and The Psycho Kitty

Favorite Crazy Appraisal Stories – The Psycho Kitty

Excerpt: Psycho Kitty

I had an appointment at a home in the country out in the woods. The access instructions said the cat MIGHT be caged. Got to the home and the cat was at the front door and hissed at me as I went in. I tried to make friends with the cat, but it didn’t work, so I ignored the cat and started my inspection.

As I came out of the first-floor master, he was waiting. He stood on his hind legs, teeth showing, hissing, and came at me. Once again, I used my clipboard and ran to the laundry room where I was able to shut the door. I was safe…

To read more strange and/or funny appraisal stories, click here

My comment: We all have appraisal stories, of course!! In my 45 years of appraising I have never been attacked by a cat. My creepiest cat encounter was appraising the home of a cat foster parent for a local animal shelter. Large outside cat enclosure full of cats, multiple cats on top of dressers and other places, looking at me (looked like they were hungry). I wish I could forget about all the cat eyes looking at me :<

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 psycho kitty, waivers, value vs. price, hot market, unusual homes, mortgage origination stats, etc.

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Appraisal Waivers Almost 50% of Fannie/Freddie Loans

An explosion of appraisal waivers. Is that good or bad?

By Ryan Lundquist

Excerpts: Appraisal waivers have really exploded in recent years – especially during the pandemic. But how many are there exactly? Let’s look at actual numbers to walk away with some perspective. These stats are from January 2021 from AEI.

  • 47.4% of all Freddie Mac loans had a waiver
  • 44.5% of all Fannie Mae loans had a waiver
  • Waivers are far more common during refinances
  • Only 10-12% of purchases had an appraisal waiver in January
  • Non cash-out refinances have the most waivers (67-69%)
  • The higher your loan-to-value, the lower your chance of a waiver
  • Waivers have seen a dramatic increase during the pandemic

2) Seeing numbers: What real estate professionals experience with appraisal waivers with their clients can really vary. For instance, if you work with FHA borrowers putting very little down, you probably don’t see many waivers, but if you work with conventional buyers putting 30-40% down, you’re going to see more. This is why seeing actual stats is so important.

Read more of Ryan’s comments, see graphs, plus over 25 appraiser comments: click here 

To read the AEI report, click here

My comments: I wrote about this in the February issue of the monthly Appraisal Today. Also included is data on which states are doing the most, and least, alternative appraisals. I spent a lot of time trying to get any statistics from Fannie without success. I knew waivers were going way up, especially for purchases. AEI reports have the analysis

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 unusual homes, Trip fees, waivers, solar, AVMs, mortgage origination stats, etc.

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Fact Witness vs. Expert Witness Appraisers

Excerpts: When a real estate appraiser is called to testify in a court, it could be as one of two types of witnesses. If you are called to testify as an appraiser, it’s important to determine at the time of the request which of the two types you will be: fact witness or expert witness appraisers.

A fact witness is one who testifies only to that of which he or she has firsthand knowledge and who describes only facts (as opposed to expressing opinions). There is no formal definition of a fact witness….

As an expert witness appraiser, you are allowed to express opinions. In fact, your opinions are the very reason for your testimony. The opinions are to be based on the expertise afforded by “scientific, technical, or other specialized knowledge.”

Short and well written. Includes legal references. To read more, click here

My comments: This is a never-ending hot issue for many appraisers. They don’t understand the difference. The difference is you get paid a minimal fee as a fact witness (similar to a witness of an auto accident, for example). As an expert witness, you are paid very well for prep for expert witness testimony, depositions, waiting outside the courtroom, and testifying. I have written about this in my paid Appraisal Today newsletter.

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What is most often overlooked by appraisers?


 

 

 

 

Excerpt: We recently asked our appraisal community, “What’s the ONE thing that is most often overlooked by appraisers?” We received a wide variety of answers ranging from big-picture oversights to specific details. The most common answer we received was “Highest and Best Use.”…

Highest and Best Use (HBU)

This was the top answer, which was written in by about 8% of survey respondents “First question when doing an appraisal is the highest and best use. If there are two very different opinions of value on a property, different HBU is often the reason.”…

Obsolescence

Obsolescence is another item mentioned by multiple survey respondents. Appraisers cited both external obsolescence and functional obsolescence as being frequently overlooked.

External obsolescence for the subject property – When I’m reviewing appraisals, I see this more often than other oversights. When I was performing retrospective reviews for FNMA, their biggest complaint was that appraisers did not point out external obsolescence for the subject and/or its impact on marketability (if there was an impact).”

Functional obsolescence – Appraiser focus has changed over the years as subject functionality has changed.”

To read lots more, click here

Appraisal Humor

Appraisal business tips

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What is “retirement” for appraisers?

Appraising in Retirement

by Isaac Peck

Excerpt: According to the Appraisal Institute’s latest Valuation Professional Factsheet (Dec. 2018), over 70 percent of all licensed or credentialed appraisers across the U.S. are over 50 years old, with over 20 percent being over 66 years old. As appraiser demographics continue to shift older and grayer, some within the industry have predicted sharp declines in the number of practicing appraisers as they begin to retire. However, as the numbers show, appraising appears to be an optimal career to continue part time, in retirement.

Melvyn Wolf, a Certified Residential appraiser, licensed in Illinois and Wisconsin, is one such appraiser. Born in 1942, Wolf is 77 years old and has been a real estate appraiser for 33 years. He says he will continue appraising as long as he is physically fit and in good health. Here’s his story.

To read more, click here

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My comments: The July 2018 issue of Appraisal Today had my article: “Retirement for fee appraisers: when, why, and lots of options”. I discussed when to take social security, fixed costs, burnout, spouse retirement, etc. Also, for self employed people what does retirement mean? For appraisers, including myself, often you gradually cut back on appraisals. I am 76 and started Social Security at age 70. It is currently $3,470 per month and 85% taxable. It goes on top of my business income and puts me in a high marginal tax rate. I can’t cut back easily on my newsletter business, so I do fewer appraisals. What is “retirement” for appraisers?

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What is “retirement” for appraisers??

An Appraiser’s Full Circle

By Mike Foil

Excerpt: A couple of years ago, I asked my brother who had just closed his business, “How do you know when you are done and it’s time to retire?” He answered, “When it is time, you will know.”

There are considerations: health, finances, what to do, and the passion you still have for appraising. I’m turning 70 in a few months and enjoy good health. We see a path financially without the need for appraisal fees; however, having just received payment for the last file in accounts receivable did put a stamp of finality on the decision. I have ‘projects’ to work on: thinning trees and brush on four acres I want to split into three building sites, writing a study on “The Salvation of the Soul,” and family time (wife, kids, and 16 grandkids). As for my passion for appraising, it is gone.

To read more, click here

Appraisal Business Tips 

Humor for Appraisers

Covid-19 Residential Appraisers Tips on Staying Safe

Appraiser retirement plans?(Opens in a new browser tab)

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