Zillow Quits Buying Homes – Their AVM Did Not Work Well!

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Zillow Quits Buying Homes – AVM Did Not Work Well!!!

Two appraisers comment – Jonathan Miller and Ryan Lundquist

Goodbye Zillow
By Ryan Lundquist
Some of the topics:
  • Failure despite massive price increases
  • Zillow losing isn’t about the market
  • The school of hard knocks
  • Public perception
  • Cannot smell the cats: I gave a quote to Money.com last week, and I was especially excited they used my “Zillow cannot smell if 20 cats live there…” line.
To read more, click here
My comment: I love the “20 cats” comment. I appraised a house with at least that many cats. They were on all the tops of dressers, cabinets, etc., Very Creepy! I still have nightmares about it sometimes. A volunteer owned it for a local animal shelter. She had a large outdoor enclosure. Did not smell, but…
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By Jonathan Miller

Zillow Offers As A Proxy For ‘Big Data’ Shows The Lack Of Qualitative Analysis

Yes, big data usually infers ‘quantitative’ analysis, as in “relying on numbers.” The Zestimate legacy of profound inaccuracy finally reached a devastating conclusion with the collapse of Zillow Offers this week and the loss of hundreds of millions in shareholder…
Yes, big data usually infers ‘quantitative’ analysis, as in “relying on numbers.” The Zestimate legacy of profound inaccuracy finally reached a devastating conclusion with the collapse of Zillow Offers this week and the loss of hundreds of millions in shareholder equity. Zillow never figured out the qualitative part that enables the actual precision in the pricing of a home sale.
To read more, click here
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This Just In: The ‘A’ in ‘Zillow’ Stands for ‘Accuracy’
Excerpt: Yet it would seem unlikely that Zillow Offers used something completely separate and conceptually very different from their ‘Zestimate’ because it would be quite expensive and extremely difficult to keep a radical new valuation concept a complete secret. All we know at this point is whatever valuation methodology they used was a complete fail. And to go a step further their Zestimate valuation methodology has long been a complete failure in the accuracy department. But it hasn’t been a complete failure in the consumer credibility department at all.
To read more and see fun videos, click here

Zillow (in) accuracy(Opens in a new browser tab)

Appraisal Business Tips 

Humor for Appraisers

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Dr. Seuss House aka The Goose Creek Tower

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Appraiser Retirement?

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Appraiser Retirement?

By An Anonymous Appraiser
Excerpt: …retired 2 months ago, and I am SO GLAD I did. I’ve had enough. I decided on an appraisal career because I found real estate, and especially the valuation of homes to be extremely fascinating and challenging, and although I had heard that the appraisal profession was making changes back 30+ years ago, I “assumed” it was becoming a more upstanding, professional occupation, in the eyes of the lenders, politicians and general public, similar in stature to doctors, lawyers and accountants. In other words, they would would hold the appraiser’s opinion via “trust in the professionals opinion”.
What we got, was 30+ years of complaints from the lenders and politicians who blamed appraisers for all of the lenders and political wrong doings. And the public believed them! Why? Because appraisers NEVER got together as an organization to support other residential appraisers! Oh yes, there was the Appraisal Society and the Appraisal Institute, of which I became a candidate, but when I realized that they catered to commercial appraisers, and recently to their own needs, I decided there was no reason for me to join. Besides when licensing came along, the license was the main criteria for selecting the appraiser.
To read more plus many appraiser comments, click here
My comments: Many appraisers are getting older and retiring now for various reasons.
I am 78 years old and have been appraising for 45 years. I love appraising!! (I have not done any lender res appraisals since 2005.) I have friends near my age who are still appraising and like it. They work for direct lenders mostly and do little AMC work.
What is “retirement” for fee appraisers? One of the great reasons to be a fee appraiser is choosing when, where, what you appraise, and whom you work for. In the past, I worked long hours 7 days a week on properties in a wide geographic area. It has been many years since I worked that hard. Many of us just fade away gradually ;>
I recently spoke with two 55-year-old female appraisers. They had both invested in real estate and were retiring early. I have known appraisers over the years who did this. Why aren’t there more? Risk avoidance, I guess. I invested in a duplex in 1986 ($120,000 purchase price). I am living there now after selling my large home. My tenants pay mortgage, insurance, and taxes.  I shoulda bought more when the prices were way down here!
I have written about appraiser retirement in my monthly newsletter many times over the years. Be sure you have “tail” insurance to cover any e&O claims after you retire. Mine is free from my E&O company. My most recent article is from May 2021, “Retirement: To Stay or Not to Stay. That is the question!!” Lots of issues to consider. Tip: don’t start taking Social Security until you are 70. I get $3,235 per month now, before the cost of living coming increases. The maximum is $3,985 per month.

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6 Appraiser Tips on Increasing Productivity

6 Ways to Streamline Your Appraisal Workflow

Excerpt:
#6. Reduce revision requests
A revision will waste 15 minutes minimum. To reduce revision requests, track your clients’ common questions, and include that information in all reports when applicable. If you work for a lot of different lenders or do a lot of appraisals for lending-related purposes, those clients and intended users are probably asking some of the same questions over and over.
For example, if your clients often ask about septic, go ahead and include a comment about the septic system in your initial report. In other words, answer the question before they ask it.
To read more plus get 5 more tips, click here
My comments: Short and well written, worth reading. I have been writing about time management in my Appraisal Today monthly newsletter since June 1992, the first issue. Saving time is a very hot topic now when everyone is very busy. All of my many articles are available free to paid subscribers. They are much longer than this blog post, of course.

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NOTE: Please scroll down to read the other topics in this long blog post on Fannie News on Forms and UAD, September Fannie Update, Bias (again), unusual homes, mortgage origination stats, etc.

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Wholesale lender has AMC-free appraisals

UWM launches AMC-free appraisal program to coordinate appraisals in-house

Excerpt: The Pontiac, Michigan-based wholesale lender will instead coordinate appraisals in-house, contracting with appraisers directly, offering appraisers and brokers a way to bypass AMCs altogether, which UWM CEO Mat Ishbia characterizes as “middlemen.”
During a Facebook Live address, Ishbia proclaimed that while AMCs add value to the industry, appraisals have been a stumbling block for the mortgage industry.
“It’s going to be cheaper for consumers and more money for appraisers because there’s no longer going to be a middleman with UWM Appraisal Direct,” Ishbia said.
To read more, click here
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Comments from Rob Chrisman’s daily email mortgage newsletter 9-13-21
Critics wonder if appraisers will sign up for UWM’s program, or any program for that matter, given the amount of business licensed appraisers have already. AMCs take about $125-150, maybe as much as $200. If a company like UWM offers $150 more than AMCs to take their orders, does it come with a price, such as an appraiser saying they won’t do business with other AMCs? Stay tuned!
To read lots more, click here Search for appraisals.
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Comments from AppraisedValue (Housing Wire) email with comments. No link available.
The larger question is whether UWM’s direct-to-appraiser approach will be attractive enough to keep appraisers too busy to work with AMCs and whether other lenders will follow suit. As our story notes: Likely the strongest incentive for appraisers is that UWM will pass along the full appraisal fee paid by the borrower. And, while AMCs have been dogged with allegations of late pay, UWM will pay appraisers the next business day after a successful appraisal completion. 
Still, some AMCs, such as Class, have already instituted a process to pay appraisers within 24 hours. And some lenders don’t want the headache of bringing valuation in-house.
My comments: I like what UWM is doing, of course. As we all know, there are much more significant problems with AMCs than money, such as long lists of requirements, including everything from every lender they work for!

Appraisal Business Tips

Humor for Appraisers

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Location, Location, Location In Appraisals

What’s Location Got to Do with It?

By Steven W. Vehmeier

Excerpts: We’ve all heard the old mantra that real estate is all about “location, location, location.” A perfect example of the importance of location in appraising can be found in The Villages in central Florida.

The development called “The Villages” has seventy-eight communities, each called a “village,” ranging in size from 100 to around 1,500 homes in each. In total, there are somewhere around 140,000 residents, and the home prices in these individual villages range from the low one-hundred thousand up to a couple million. In some cases, villages located near and/or adjacent to each other can vary significantly in price….

An appraiser not familiar with The Villages could easily over-or under-value a property by mixing villages. For example, let’s say the subject is a 3-bedroom, 2-bath, 2,000 square foot home with a two-car garage on a typical sized lot. It would not be hard to find hundreds of homes with similar physical characteristics nearby; however, some might be located in the “wrong” village…

Can we apply this “village” concept to other areas? Are there typically many villages or neighborhoods in and around most major cities? Do the same principles apply in comparable selection and resultant values? Of course, they do!

To read more, click here

My comments: Very interesting “case study.” Tim Andersen soon will have two articles on neighborhoods and what USPAP says in Appraisal Today monthly newsletters.

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2021 Appraiser Fee Survey

2021 Appraiser Fee Survey

By Isaac Peck
Excerpt: The 2021 Appraiser Fee Survey includes 365 Metropolitan Statistical Areas (MSA), as defined by the U. S. Census Bureau, with rural areas included by state. The survey includes eight different appraisal products, including reviews and FHA appraisals, and addresses turn times, to offer insight into that controversial topic by area.
To check out the very detailed report for your MSA, click here
My comments: Lots of info by MSA! I got this info Wednesday and did not have time to look at it in detail.
Raise Your Fees, especially if working for AMCs!! Before AMC broadcast bids looking for the lowest fee, appraisal fees did not change much when volume changed. Since 1986 direct lender fees went up gradually. In my area, fees were about $250 in 1986 for SFR. Now fees have gone up to about $450 – $550 for regular long-time lender clients (and local AMCs). National AMCs are not loyal. Direct lenders can be loyal.
Fascinating and very comprehensive results by state and MSAs. I hear a lot about lenders and borrowers complaining about high appraisal fees. But in my area fees are not that high per the survey. I hear regularly about desperate AMCs who will pay $1,000 or more for appraisals. Appraisers are deluged with AMC appraisal requests, which are often deleted unopened of course. I also hear that sometimes the fee to the appraiser is much lower than the AMC fee.

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Subjective Language in Appraisals

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What is an Appraisal “Inspection”?

Appraisal Inspection Vs. Home Inspection

Excerpts: Why are these roles often confused? What is an Appraisal “Inspection”?

The root of many misconceptions about the appraisal inspection is the word “inspection” itself. It is true that as part of the appraisal process, the appraiser might perform some sort of onsite quality, condition, and functional utility survey of the property to determine its relevant characteristics and if it meets certain standards. For example, to the general public, the FHA requirements that an appraiser must operate certain systems in the home (plumbing, electrical, HVAC) seems similar to what a licensed home inspector does.

The Oxford Online Dictionary defines inspection as: “Careful examination or scrutiny”

Merriam-Webster’s Online Dictionary defines inspection as:

“The act of looking at something closely in order to learn more about it, to find problems, etc.; the act of inspecting something”

It’s somewhat of a benign definition, is it not? There’s nothing really scary there, yet many appraisers attempt to avoid confusion, and (potentially) limit their liability, by avoiding use of the word “inspection” entirely. Many appraisers use euphemisms for this term in their appraisal reports, such as “property visit” or “viewing.”

Even FHA got into the euphemism game with the publication of Handbook 4000.1, which went into effect in 2015. The words “inspect” or “inspection” generally do not appear in reference to an appraiser’s obligations. Instead, the words “observe” and “observation” are used.

To read more, click here

My comments: USPAP has never required an inspection. USPAP defines “Personal Inspection” as the following: a physical observation performed to assist in identifying relevant property characteristics in a valuation service.”

The word “inspection” is used in various locations, such as Advisory opinion A02, including Minimal level of Inspection.

The fourth exposure draft for the 2023 version has Section 1: “Review of Requirements about Disclosing a Personal Inspection.” Final comments deadline is today, July 23, 2021.

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

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Interracial Etiquette for Appraisers

Interracial Etiquette for Appraisers

By David Braun, MAI, SRA

A spotlight has been shined on the appraisal profession’s propensity towards racial bias.  There are at least two environments to contemplate.  One is the legal aspect, and the second is more of a personal nature.

The practicing appraiser will need to understand the existing and proposed laws relating to racial bias, especially in the context of “Fair Housing” laws.

This short article presents five steps to achieve practical interracial etiquette on a more personal level.  These steps apply to any combination of races.  If an appraiser cannot follow these proposed steps, there may be no need to study the legal aspects as it is not acceptable to say, “I hate (whichever) people, but I always treat them fair and professionally in business.  Sorry, you are in our prayers, but you cannot be in our profession.

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Bias in Housing is Not Appraisers’ Fault

Racial Bias in Real Estate: Is it the Appraisers’ Fault?
The best analysis I have ever read. 

By Maureen Sweeney, SRA

Bias in Housing is Not Appraisers’ Fault

Excerpt: The appraiser must be independent, impartial, and objective. In a mortgage transaction, the appraiser evaluates the property that is to be used as collateral in a mortgage finance transaction. The appraisal is provided to the lender, who uses the appraisal as one of the many criteria used to underwrite the loan and determine if a mortgage loan will be funded or not. Contrary to what some may believe, the appraiser does not make underwriting or lending decisions.

Discrimination, including the long list of anti-cultural, anti-national, and anti-ethnic terms, is a multi-layered, multi-cultural, and multi-generational issue. The systematic, historic, and institutional causes of the various business and government policies and practices need to be addressed and cured. We do not blame the doctor for a cancer diagnosis.

We do not blame the journalist as the cause of the natural disaster that is reported on the evening news. Why is the appraiser blamed for reporting on the real estate market?

To read more, click here

My comment: By far the best, understandable analysis I have read. No whining or ranting. Many appraiser comments and forwarding. Comprehensive post with many references. I had not heard about some of the references. Appraisers are not the problem. We have been told for many decades to be knowledgeable and aware of Fair Housing issues.

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