Freddie Advice: How to Avoid Using “Bad” Words

More Objective Appraisals: A Practical Guide for Appraisers

By Scott Reuter Single-Family Chief Appraisal Officer, Freddie Mac

Excerpts: Changing the Mindset – Facts First

What’s the number one thing appraisers should be doing when they develop an appraisal? Stick to the facts. Here are a few more best practices that can help appraisers achieve more objective appraisals.

  • Don’t think like a salesperson – avoid words that may be common in Multiple Listing Service (MLS) and used to help sell a home.
  • Don’t use shorthand – both ‘123 Church Street’ and ‘123 Church’ could refer to an address but might come across differently in an appraisal.
  • Don’t copy and paste – avoid copying from Wikipedia or old appraisal reports or commonly used templates when providing neighborhood descriptions for similar communities.
  • Use pre-screening practices – while you can implement your own pre-screening process, some appraisal companies can implement them too.

To read more, click here 

My comments: Read this article! Not just a list of words and phrases. Excellent examples and analysis. The author started as a second-generation practicing residential appraiser. He knows what you want.

 

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NOTE: Please scroll down to read the other topics in this long blog post on effect of low rates on existing home loans, Liability, Bias, FHA manufactured home changes, unusual homes, mortgage origination stats, etc.

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

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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VA Update for Appraisers

VA Update for Appraisers

Interview with VA’s Chief Appraiser

By Isaac Peck

Excerpts: …the United States Department of Veteran Affairs (VA), is known throughout the valuation community for respecting the work of appraisers and maintaining reasonable fee schedules.

The questions:

  • Fannie Mae and Freddie Mac are making desktop appraisals a permanent fixture in their valuation offerings. Is the VA looking at these types of valuations and what are some of the considerations?
  • There’s been a lot of buzz about measuring homes to ANSI standards in the appraisal industry–what can you tell us about the VA’s stance on ANSI? Do you anticipate requiring ANSI on VA appraisals in the future?
  • There is a lot of concern about discriminatory appraisals—what is the VA doing to protect Veterans from discrimination and what are your thoughts on the topic?
  • What’s new at the VA? Any final thoughts?

To read the answers and more, click here

My comments: I have always strongly recommended doing VA appraisals, especially since AMCs took over other lenders’ appraisal management. VA wants you to help veterans. Lenders want to make more money. I wrote a long article about VA in the past, available to paid subscribers. I interviewed VA appraisal employees, fee appraisers who liked VA, and other appraisers who did not want to work for VA.

Appraisers and local market analysis

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Three 2022 Residential Appraisal Forecasts

Three 2022 Residential Appraisal Forecasts

The 20 appraisal events that will surface, occur or continue on into 2022
By Tim Andersen, MAI
Excerpt of three of the Events:
6. So far, appraisers have not organized themselves to fight the bogus bias and discrimination charges against them. Despite the need for such pugilistic organization, however, the status quo won’t change.
9. More and more state appraisal and taxing authorities will recognize Fannie Mae’s move to use the ANSI measurement standards by adopting those standards themselves. While this is likely a positive step, it will result in another level of regulation and standards imposed on appraisers.
10. State appraisal boards will continue their migration toward becoming consumer advocacy agencies; thus, their migration away from their original purpose, the credentialing, educating, and disciplining of real estate appraisers.
Warning: some are very controversial!
To read all 20, click here. I posted this on my blog, so you can make comments!

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2022 Residential Appraisal Forecast – 20 Events

The 20 appraisal events that will surface, occur, or continue on into 2022 By Tim Andersen, MAI

Editor’s note: some of these are controversial! Please leave your comments, and read other appraisers’ comments, below. 

Mortgage forecast – loans predicted to drop 30% in 2014

Appraisers' forecast for biz in 2014

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Appraisal Completion Certifications – be careful!

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ANSI Z765-2021 Information Resources – CLICK LINK BELOW FOR MORE

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How Do Driveways Affect Appraised Value?

What’s The Size of Your Driveway?

By Jamie Owen
Excerpt: It really depends on how the appraiser is looking at it. Are they reporting the width of the driveway, the depth, or how many cars can fit on the driveway?
Most appraisers reflect the width of the driveway. Why? For one thing, many lenders prefer the driveway size to be reported this way. This is likely because it is less subjective. For instance, if the appraiser reports the driveway size based upon the number of cars that can fit on it, what kind of automobile are they using for their measurement? After all, a driveway may be able to accommodate a larger number of smaller cars than bigger ones.
Does it affect value? As is the case with nearly every aspect of a home, the answer is, it depends.
For instance, in high-density neighborhoods where street parking is limited, the size of the driveway could make a difference in value. On the other hand, in other high-density neighborhoods, many homeowners may use public transportation. If this is the norm for the neighborhood, the size of the driveway may not have any impact on value.
To read more and see fun animated gif, click here
My comments: Worth reading. Lots of topics are covered. Check out the fun animated gifs, etc.
In San Francisco, for example, off-street parking is at a premium in many neighborhoods. My brother bought a house 25 years ago with no off-street parking (primarily single family homes). I warned him, but he really wanted the house. It was a hassle then, but now, it is very difficult to find parking as many neighbors rent rooms to tenants with cars.
A significant issue with ADUs is where will the car(s) park? Will they take up the neighbors’ on-street parking?
I moved to San Francisco in 1968 and worked in a lab 20 miles away. The closest parking was 2-3 long blocks away when I got home from work. I moved from Tulsa, OK, where there was lots of parking everywhere. I never lived in a place without off-street parking again!
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What are Pass through Bedrooms for Appraisals

Pass-through Bedrooms

Excerpts: This may not be a major problem if the house has sufficient bedrooms to match what is typical and expected in the neighborhood. It can have a negative impact on the marketability of the home if this arrangement reduces the number of usable bedrooms from what is typical.
The floor plan layout of a home can have an impact on its market value: The impact on value is determined from market data and how buyers perceive it. Did the home sell for less because it has a different floor plan than what is typical and expected?
The cost to fix can vary: Depending on the current floor plan configuration and the location of the bedroom in relation to other rooms the cost can vary widely and this should be taken into consideration when comparing it to the value added by fixing the problem.
Written for home owners with a good discussion of cost to cure vs. value added.
To read more, click here
For more analysis by Ryan Lundquist (from 2016) of what I often see, click here The image above is from Ryan’s article.
My comments: I have had many discussions with real estate agents and home owners about this issue. The number of bedrooms in a house can be a significant factor in many markets. In my market most homes were built prior to 1940 and have modifications, such as additions, over time. The pass through bedrooms can seldom be fixed. I usually call them “dens”.

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Top Reasons Why It Is Great to be an Appraiser!

Appraiser 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.

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

We all need some humor!! These made me laugh ;>

To see 7 more reasons, click here

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Covid-19 Residential Appraisers Tips on Staying Safe

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Raise appraisal deminimus to $2 million or $5 million?

 

Should we raise the deminimus to $2 million? Or $5 million?

By George Dell
Excerpt: To simplify this discussion, let’s note two facts:  Appraisers can perform ‘evaluations’, normally using the same scope of work as an unlicensed “evaluator”.  What’s the difference?  It appears to me that there is one key difference.  The question is then:  Which part of the service is not required?  Is it the integrity/ethics, or the performance (such as using the right data and analysis)?

It appears to me that since unlicensed persons can charge less, have less tax/fee burden (for licensing, education, and errors/omissions insurance- the less ethical, less responsible ‘evaluator’ can always outbid the licensed appraiser every time.

Read the full blog post and appraiser comments. What do you think? Add your comments.

My comments: Interesting analysis by George, of course!! Credit unions are proposing to raise the commercial deminimus to $1,000,000. I didn’t know they made commercial loans. Guess they forgot about the commercial crash in the late 1980s.
As long as Fannie and Freddie (and their investors) require res appraisals, it won’t have a big effect on residential. The FIRREA deminimus in 1989 was $200,000. No effect on much of anything, even though we thought the Sky Was Falling.

The usual Mortgage Cycle: Good Business = lower requirements. Bad Business = higher requirements.

 

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