Appraisal News and Business Tips

Posts Tagged forecast

5/31/18 Newz//Crash in 2020?, Floating Homes, Rate changes since 1900s

Floating Homes the Ultimate Water View

Excerpts: For many, floating is something new and adventurous,” said Max Funk, co-editor of “Rock the Boat: Boats, Cabins and Homes on the Water” (Gestalten, 2017). The book reveals an explosion of creativity in buoyant architecture, including an egg-shaped floating cabin in England, floating spas (with working saunas) in Finland and the United States, and floating geodesic domes in Slovenia.

Outside of Seattle, where houseboat construction is being curtailed because of the potential impact on local salmon populations, Ms. Bethell said, the most prominent areas in North America for floating homes are the San Francisco Bay Area; Vancouver, British Columbia; Key West, Fla.; and Portland, Ore.; where the number of floating homes has doubled since 2012.

My comment: In the San Francisco Bay Area they are in several marinas, including in my city, Alameda. In the past, they were anchored around the bay, but were moved to marinas due to pollution concerns. When I moved here in 1968, I visited one anchored off Sausalito in a protected bay with no sewage storage.

2018’s Hottest Backyard Amenity: Detached Living Spaces

Excerpt: The reason for their rise in popularity? Privacy, for one. There’s no one-and no surrounding noises from your disruptive family or neighbors-to make you lose your focus. It’s all you, the shed and whatever your No. 1 priority is for the day. Not to mention, if you have a lush and peaceful backyard, the view is a plus.

So, what do these look like? Anything you can imagine. From hobbit hole-style sheds to more contemporary glass structures, these can take the form that best suits your needs. And what are they used for? That depends on you…

http://blog.rismedia.com/2018/detached-living-spaces

My comment: a great way to get some peace and quiet plus privacy ;>

Read more!!

3-29-18 Newz//Last Minute Tax Tips, FHFA-Value of AMCs, Time Capsule Homes

New FHFA report says AMCs are not much different than direct lender appraisals – value added??

From the March 2018 paper (“Are Appraisal Management Companies Value-Adding? – Stylized Facts from AMC and Non-AMC Appraisals”:

“In this paper, we study whether there are any systematic quality differences between appraisals associated and unassociated with appraisal management companies (AMCs). We find that compared to non-AMC appraisals, AMC appraisals on average share a similar degree of overvaluation despite being more prone to contract price confirmation and super overvaluation.
“AMC appraisals also share a similar propensity for mistakes, despite employing a greater number of comparable properties. Our evaluation employs relatively simple statistical comparisons, but the results indicate no clear evidence of any systematic quality differences between appraisals associated and unassociated with AMCs.”

Note: FHFA is the Federal Housing Finance Agency, established by the Housing and Economic Recovery Act of 2008 (HERA) and is responsible for the effective supervision, regulation, and housing mission oversight of Fannie Mae, Freddie Mac (the Enterprises) and the Federal Home Loan Bank System, which includes the 11 Federal Home Loan Banks (FHLBanks) and the Office of Finance. Since 2008, FHFA has also served as conservator of Fannie Mae and Freddie Mac.

Read appraiser comments here:

Link to the report. Worth reading… or skimming ;>

Read more!!

2-15-18 Newz//Fannie Appraiser Webinar, Magical Appraiser Wand, Refis Dropping

The Magical Appraiser Wand

By George Dell
 
Excerpt: Can you just give me some magical software which will calculate my adjustments?

I get asked questions like this often. Can you just show me how to do a graph a client wants? Can you just give me your class stuff so I don’t have to come all that way? So often, the question degrades into something like “Why does the regression software give stupid answers?” I pushed the magic button!

People do not like the answer. You’re paid to do an analysis, not wave a magic wand, or push a magical appraisal button. We have another name for that, it’s called an AVM.   In addition to a point value prediction, AVMs can be tested for reliability. This is called the FSD (Forecast Standard Deviation). The AVM. It gets results. It’s fast. It’s cheap. And it provides a measure of reliability – the FSD.

Why would a client want something slower and more expensive with no measure of reliability? Why hire a pesky appraiser?

Click here for the answer!!

Read more!!

10-12-17 Newz//FHA-Appraisers responsible for water quality reporting?, Hybrid appraisal survey

New CU 4.2 makes it easier for lenders to change comp and subject data. MI companies can access CU

Excerpts: During the weekend of Dec. 9, we will implement Collateral Underwriter® (CU™) 4.2, (which includes) the ability to edit the subject and appraiser-provided comparable sales property characteristics. CU 4.2 will also provide mortgage insurers (MIs) with access to CU. Lenders will be able to give their MI risk partners access to appraisal-specific data by providing them the Doc File ID generated at the time of appraisal submission.

Comparable Sales Review Edit Feature
The ability to edit subject and appraiser-provided comparable sales property characteristics (currently available via the pencil icon in classic CU) will be added to the Comp Review page. Clicking on the pencil icon in the Edit column of the comparable sales review table will open the Edit Property Characteristic pop-up. If there are data errors or missing data elements, the edit feature can be used to modify the data elements and rerun the model with the revised data.
Click here to read the full release
My comment: Lenders have been able to change subject and comp data and now it will be easier? I didn’t know that they are able to change the data now. MI companies have access to CU? What about appraisers?

Read more!!

9-15-16 Newz// Rush fees, Flying saucer homes, $1.1 billion home

A Map of the Last Remaining Flying Saucer Homes

All the 1960s Futuro Houses left in the world.

Just For Fun!! Take a break from writing up those darn appraisal reports ;>

Excerpt: The Futuro House, in all its space age retro splendor, is like a physical manifestation of 1960s optimism. Shaped like the Hollywood idea of a flying saucer, the Futuro is a plastic, prefabricated, portable vacation home built to easily adapt to any climate or terrain, from mountain slopes to the seaside. After enjoying a heyday in the late ’60s and early ’70s, the remaining Futuros are now scattered across all parts of the globe, from the Australian beaches to the mountains of Russia, like secluded relics of midcentury technoutopianism.

Very interesting!!

http://www.atlasobscura.com/articles/a-map-of-the-last-remaining-flying-saucer-homes

My comment: I love atlasobscura.com. The strange homes and buildings I include in these emails are just the tip of the iceberg!!!!

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What is your typical rush fee?

www.appraisalport.com poll.

 

My comment: Rush fees are another way to make more money during this boom time, to save for the downturn when AMC fees will drop.

The most critical appraisals are those for purchases, which can require rush fees to get appraisers to drop their regular refi business and do them.

I am hearing about widely varying AMC fee increases from around the country, depending on the local market supply of appraisers willing to work for AMCs I guess. Savvy AMC appraisers reply to low bids with an increased fee. After a few weeks, sometimes their fee is accepted. Local appraisers I know only work for a very few select AMCs, if any. But, when business slows way down, they take more AMC work. I also hear from appraisers in the same market with widely varying fees that they will accept.

What do I do? Rush fees stress me out too much as I am very backed up. I just put new appraisal requests in my queue, which is typically around 60 days. Sometimes I will do one faster if it is a special circumstance and/or a referral from a local real estate agent, but I don’t require a rush fee. When I used to do appraisals for purchases, I always gave them priority but never charged a rush fee. I am definitely in the minority!!

What do you think? Post your comments at https://wp.me/p7jsxG-Cl !!!

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The Most Expensive House In The World Could Sell For $1.1 Billion

Just For Fun!! Take a break from writing up those darn appraisal reports ;>

Excerpt: What can justify a $1.1 billion price tag for a house?

Before searching for the features behind the number, let’s clarify that in this case, “the house” is rather a large, opulent mansion on the French Côte d’Azur, set in a “small” privileged refuge between Nice and Monaco frequently described as the ‘billionaires’ playground.’

First, there’s the house itself, with the understated name Villa Les Cèdres-The Cedars-at the center of Saint-Jean-Cap-Ferrat, known in French as a “presqu’île,” or “almost island.”

The description of the magnificent property in the French press includes 10 bedrooms, a ballroom, concierge, a chapel, 50-meter swimming pool dug into the rocks, a winter garden and stables for 30 horses.

My comment: I could take a few months (or more) to do an appraisal for a trip to France to appraise this property… Or maybe just an open house tour ;>

Very interesting!!

http://www.forbes.com/sites/ceciliarodriguez/2016/08/20/at-1-1-billion-the-most-expensive-house-in-the-world-in-france-goes-to-market

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Beware of unknown desperate AMCs sending email solicitations

An appraiser I know, who only works for one AMC, received an email request from an AMC he had never heard of. He replied politely that he was not interested. He was added to their approved list and bombarded with requests for appraisals every day. It was a lot of hassle to get his name removed.

I seldom get any AMC appraisal requests by email or phone, or request to join their panel. I must be on a Do Not Call or Email List ;> I have been replying to emails saying I have never worked for an AMC. They are really getting desperate!! Now, I am thinking about not even replying.

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In the June 2016 issue of Appraisal Today

FHA attic inspection requirement 

Excerpt: Inspection Tips – Insulation and attic access by Doug Smith, SRA, AI-RRS

When blown in insulation is added, the installer will often add an extension or dam to the scuttle that makes it difficult to fully observe the full attic.

Formerly, attics had walkways which when blown in insulation is applied, these walkways were covered with insulation. If the scuttle is in a closet and closet shelves make it difficult to fully access the attic, the difficulty with attic must be reported and a photograph taken to demonstrate the difficulty with attic access.

However, if the access is blocked by personal possessions, it may be practical to enlist the help of the homeowner to make the attic or scuttle accessible. In the instant case of the underwriter stating that a full inspection is required, the underwriter is incorrect.

The appraiser must document why a full inspection was not performed when there is not an accessible attic. Suggested language might include: “A full attic inspection was not

performed as the subject property does not have a readily accessible attic and only has scuttle access.” Along with a photo of what can be seen from the scuttle, the appraiser might add that the appraiser completed a head and shoulders inspection of the attic.

Remember to check the block on page one of the form that the attic is accessed by a scuttle. If the property has a full attic, note if a full inspection was performed and comment how access was gained either by stairway or drop stair.

To read the full article, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.

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If you are a paid subscriber and did not get the September 2016 issue, emailed September 1, 2016, please send an email to info@appraisaltoday.com   and we will send it to you!! Or, hit the reply button. Be sure to put in a comment requesting it ;>

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Selling a $5 Million, Seven-Story Basket Is No Picnic

Its size, location, and fundamental basket-ness make it tough to sell, even at a steep discount

Thanks (again) to Jonathan Miller at http://www.millersamuel.com/housing-notes/

Excerpts: “You might see it three or four miles off before you come around the bend, and then you say, ‘That is a basket. That is unquestionably a basket,'” said Tom Rochon.

It is a basket, or rather, a seven-story office building shaped like one-a massive facsimile of the signature picnic basket made by the company once headquartered there. Some 40 miles outside Columbus, Ohio, the basket building, as it’s locally known, is one of the area’s grandest attractions, inviting quirky selfie-seekers, architecture nerds, and, of course, basket enthusiasts.

When the property – slightly larger than another Ohio landmark, Cleveland’s Rock and Roll Hall of Fame-was listed 18 months ago, the asking price was $7.5 million. Now it’s on the market for $5 million, or about $28 a square foot, about half of what traditionally shaped office buildings in the area usually sell for… commercial property in the area typically ranges from $50 to $80 a square foot.

The basket was built for about $32 million and finished in 1997.

http://www.bloomberg.com/news/articles/2016-09-07/selling-a-5-million-seven-story-basket-is-no-picnic

My comment: I regularly write about weird properties in my weekly emails, including the Basket House a few years ago. Finally we find out what it is (not) worth. Definitely an Appraisal Challenge!!

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Status Quo Bias: ‘Linear” Thinking in the Real Estate Industry

by Jonathan Miller

Excerpt: When we look at forecasting, planning, trending or anything that includes a look out over the future, I find the real estate industry (i.e. appraisers, real estate agents & brokers) generally thinks along linear lines.

For example:

When housing prices rise…they will rise forever.

When housing prices fall…they will fall forever.

When sales activity rises…they will rise for ever.

When inventory falls…it will fall forever.

When rental prices rise…they will rise forever.

…and so on.

Where does this status quo bias come from?

Click here for some more interesting comments..

http://www.millersamuel.com/status-quo-bias-linear-thinking-in-the-real-estate-industry/

My comment: Of course, I completely agree. It is very important if you work in a market like mine, where residential prices seem to go from stable to increasing and back overnight. I have no idea why. I go on the broker open house tour every week and see what agents are saying. For example, only 1 or 2 offers vs. 5-6 and longer days on market

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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 https://www.mba.org

Note: I publish a graph of this data every month in my printed newsletter, Appraisal Today. For more information or get a FREE sample issue go to www.appraisaltoday.com/products or send an email to info@appraisaltoday.com . Or call 800-839-0227, MTW 8AM to noon, Pacific time.

WASHINGTON, D.C. (September 14, 2016

Mortgage applications increased 4.2 percent from one week earlier,

according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 9, 2016. This week’s results included an adjustment for the Labor Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, increased 4.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 17 percent compared with the previous week. The Refinance Index increased 2 percent from the previous week. The seasonally adjusted Purchase Index increased 9 percent from one week earlier. The unadjusted Purchase Index decreased 15 percent compared with the previous week and was 8 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 62.9 percent of total applications from 64.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 4.6 percent of total applications.

The FHA share of total applications increased to 9.6 percent from 9.5 percent the week prior. The VA share of total applications increased to 12.0 percent from 11.9 percent the week prior. The USDA share of total applications increased to 0.7 percent from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 3.67 percent from 3.68 percent, with points decreasing to 0.36 from 0.37 (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 $417,000) decreased to 3.64 percent from 3.66 percent, with points increasing to 0.36 from 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.50 percent from 3.52 percent, with points decreasing to 0.27 from 0.35 (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 increased to 2.97 percent from 2.96 percent, with points unchanged at 0.34 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 5/1 ARMs remained unchanged at 2.87 percent, with points increasing to 0.37 from 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate increased 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.

8-18-16 Newz: Ex-appraiser sentenced , Statistics humor, Flooding

Statistics humor

Three statisticians go hunting. They see a deer and the first one

shoots, hitting three feet left of the deer. The second one shoots, hitting three feet right of the deer. The third one leaps up in joy, yelling, “we got him!”

Thanks to Scott Jura for this great joke! Posted on a yahoo appraiser discussion group.

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Ex-appraiser sentenced to 6 years for mortgage fraud

Excerpt: A Pittsburgh federal jury convicted Jason Moreno, 33, on five counts of wire fraud and two counts of conspiracy in September 2013.

A former appraiser, Moreno overstated housing values and glossed over problems such as a den of black snakes in one house’s basement so that others in the scheme could obtain loans for more than the properties were worth.

U.S. District Judge Nora Barry Fischer resentenced Moreno on Monday to six years in prison and three years of probation.

http://triblive.com/news/adminpage/10811871-74/moreno-court-sentenced

Court documents from 1/16. Lots of very interesting details:

http://www2.ca3.uscourts.gov/opinarch/141568p.pdf


Read more!!

8-11-16 Newz//How to fix the appraiser shortage now, Photo blurring, Gold medal for town planning in 1936 Olympics

America’s First Medal at the Nazi Olympics Was For…Town Planning

Excerpt: Yes, from 1928 until 1948, town planning was an actual Olympic sport.

Town planning fell under an “architectural design” category at the Olympic art competition. The field that year was dominated by German entries. Yet the first U.S. medal of the Olympics went to Lay, a New York architect, for his ambitious blueprint to modernize Marine Park in Brooklyn.

http://www.atlasobscura.com/articles/americas-first-medal-at-the-nazi-olympics-was-fortown-planning

My comment: I love these Obscure Olympic Facts ;>

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Photo blurring gone waay overboard!!

Excerpt: At issue was the ubiquitous “client requirement” involving digital masking of people from images. While lenders and AMCs wave the Fair Housing penalty flag in order to assure compliance; there is NO such law. Never has been.

Lenders need to re-examine the reason for all of these pointless and invasive interior shots. They add nothing meaningful to the file. Nobody is laying out mortgages for Beanie Baby collections and bad drapes. So why are appraisers wasting megapixels on decorating images?

AMCs are on notice to cease demanding and insisting that appraisers do digital staging. That is clearly in violation of Illinois law.

Click here to read the full article plus the comments, of course…

http://appraisersblogs.com/digital-staging-amc-fair-housing-myth

My comment: Blurring interior pictures on walls, personal objects, etc. seems very excessive. Don’t know about rooms with strange devices and chains hanging from walls and ceilings, etc ;> Maybe appraisers will only be able to appraise vacant homes with nothing in them without getting requests for blurring. This applies only to AMCs doing business in Illinois, but maybe the AMCs will quit doing it in other states.

Read more!!

8-4-16 Newz// Data verification, AMCs-percent of work, Drones

Collection and Verification of Residential Data in the Sales Comparison Approach

Appraisal Practices Board, Issued June 30, 2016, First Exposure Draft

Deadline for comments is August 12, 2016

The document includes examples for lender and non-lender work plus references to lender requirements. Extensive discussions on scope of work for different types of assignments, such as relocation, individuals, effect of zoning, estates, etc. as well as verification sources, etc. etc.

Excerpt:

Example 2 – Client: Conventional Lender Effective Date: January 20, 2015

After the four siblings receive a market value range of $139,000 to $155,000 from the appraiser, they compare this range to a $140,000 cash offer they received from a buyer who was willing to close in one week. The siblings accepted the offer because they were motivated to sell. This new buyer purchases the residence on January 15, 2015, for $140,000 cash and then decides to finance the residence with a conventional loan. In this instance, the client is the lender.

For this assignment, the lender has specific requirements regarding what data points to verify and with whom the appraiser should verity those data points. The lender also has guidelines such as the minimal number of comparable sales the appraisal will report, and a time frame within which those comparables sold. The appraiser accepted the lender’s specific requirements and produced credible assignment results within these parameters. The final opinion of market value was $150,000, with an estimated exposure time of six months.

Every client and assignment condition will have different requirements for how much sales data is collected and how that data is verified. This can include using different sources, using different levels of verification, and concentrating on the verification of different data points. The overall goal for verification is to verify data to a level that is necessary for credible assignment results, not to necessarily verify all data and certainly not to verify all data to the same level. Different levels of verification are acceptable based on assignment conditions, availability of data, and the relevance of each data point.

https://appraisalfoundation.sharefile.com/share?cmd=d&id=s58e5be211d044a79#/view/s58e5be211d044a79

My comment: Finally the APB has something useful and practical for residential appraisers!! Be sure to read and comment on this 52-page draft. Worthwhile reading. Very comprehensive on this important topic. Discusses lender issues, including CU. I have not read the entire document but plan on reading it very soon.

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How Dirt Houses Became Beloved By The Tiny House Movement

Meet the wondrous cob.

Excerpts: It’s likely that earthen homes were among the oldest structures ever built by humanity. There are a few different techniques and many names for a building made mostly of, well, dirt, but the one that’s caught on in this recent revival of the material comes from England: Cob.

See the photo of: Ancient cob high-rise buildings in Shibam, Yemen.

Very interesting and detailed with photos:

http://www.atlasobscura.com/articles/how-dirt-houses-became-beloved-by-the-tiny-house-movement

Read more!!

7-28-16 Newz Origin of tiny houses – HUD warning letters – FHA transfers

The Surprising Origins of the Tiny House Phenomenon

Why ancient hermits are the key to understanding our tiny home obsession

Excerpts”

Invariably, someone will remind you that civilization emerged from tiny houses-caves, yurts, tents, wigwams, igloos, grass huts, and so forth.

These early antecedents are beside the point. Sioux, Samoans, and Inuits were not offered more spacious alternatives. But people who opt for tiny houses-meaning the kind that tug at heartstrings and star on cable-generally choose to live small. The reasons aren’t just practical, but also ethical and emotional.

the true parents of tiny-house living are hermits. From the ancient Chinese Taoists in mountain caves to the Desert Fathers of third century Christianity and onward (the word “hermit” derives from the Greek word for “desert”), hermits were the first people to actively downsize to confined, remote, and minimally furnished living spaces.

Read the full story here:

http://www.curbed.com/2016/7/13/12162832/tiny-house-history-hermits

My comment: The most interesting article I have read on tiny houses. Of course, I started sailing sailboats in the early 1970s. Living aboard a sailboat is the Ultimate Tiny House!! Narrow and long but very portable… Another good link from Jonathan Miller…

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FHA Case Transfer, issued July 26, FHA INFO #16-49

Mortgagees should note the following about case transfers relative to appraisal reports in both the EAD (electronic appraisal delivery) portal and FHAC:

Read more!!

7-15-16 Newz//CU Crumbles-Refi mania-Urbanization since 3700 BC

The history of urbanization, 3700 BC – 2000 AD

Watch as the world’s cities appear one-by-one over 6,000 years

Fascinating!! Take a break from appraising and check this out!!

By 2030, 75 percent of the world’s population is expected to be living in cities. Today, about 54 percent of us do. In 1960, only 34 percent of the world lived in cities.

Urbanization didn’t begin in the 1960’s. But until recently, tracking its history much further back than that was a challenging task. The most comprehensive collection of urban population data available, U.N. World urbanization prospects, goes back only to 1950. But thanks to a report released last week by a Yale-led team of researchers, it’s now possible to analyze the history of cities over a much longer time frame.

http://metrocosm.com/history-of-cities/

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419.99 Mile Marker

Just For Fun

When zealous marijuana enthusiasts kept stealing the “Mile 420” highway marker, the State of Colorado got creative.

Another obscure factoid from atlasobscura.com ;>

Since the recreational use of marijuana was made legal in Colorado in 2012, the “Mile 420” post became a hot commodity. So hot, it kept disappearing – and the Colorado Department of Transportation got tired of replacing it.

Check out the photos (and try not to click on too many of the other weird stuff) at:

http://www.atlasobscura.com/places/41999-mile-marker

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Refis skyrocketing per Zillow – Brexit

Read more!!