Appraisal News and Business Tips

Posts Tagged future

5-12-16 Newz .Geographic competency .Killing home values .Fair housing

The Most Insane Property Description Ever

Short descriptions, click here for some humor!! Reminds me of the times I am driving to the subject, hoping the house ahead is not the one I am appraising… Probably not the Most Insane, but definitely reality-based!!

http://www.thebrokeagent.com/blog-1/2016/4/the-most-insane-property-description-ever

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These Neighborhood Amenities Can Kill Your Property Value

Excerpt: In real estate, the phrase “cash is king” is oft overused. However, if you’re struggling to sell a house in a bad ‘hood, then you already know that in reality, location is king. Purchasing a home in a great area, or an area that is up-and-coming, can help maximize the value of your home investment.

So what can tear your property value down faster than a tree through the roof? The following infographic from Realtor.com offers insight-and some will surprise you!

Link to original article:

http://blog.rismedia.com/2016/these-neighborhood-amenities-can-kill-your-property-value

My comment: Of course, the effect on value varies by location – cemeteries for example.

Read more!!

4-7-16 Newz .Verifying sales .Big data .Weird bathrooms

8 Bizarre Bathrooms from Around the World

“From pop-up toilets in city streets to a bathroom surrounded entirely by an aquarium, these public and private bathrooms are beyond bizarre-and you need to see them!”

Take a break from appraising and check these out. Definitely Weird!!

http://blog.rismedia.com/2016/keepin-it-weird-8-bizarre-bathrooms

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Recent acquisitions of appraisal and title companies

Another great commentary from Dave Towne. Thanks again, Dave!!

From the article in Housingwire.com:

First American Mortgage Solutions, a subsidiary of First American Financial Corporation, acquired Forsythe Appraisals, supplementing its existing valuation capabilities.

Forsythe Appraisals is one of the largest independent residential appraisal company in the United States and offers real estate valuation solutions with nationwide coverage.

Under the acquisition, Forsythe’s management team, including President and CEO John Forsythe, Senior Director of Customer Development Tim Forsythe and Chief Appraiser Alan Hummel, will continue to lead those operations.

http://www.housingwire.com/articles/36672-first-american-mortgage-snaps-up-valuation-veteran-forsythe-appraisals

Read more!!

3-17-16 Newz .Pulling permits .Fannie FAQs .Refi revival

Appraisal and Property Related Frequently Asked Questions (FAQs)

February 12, 2016

This FAQ document provides responses to common questions related to Fannie Mae’s property eligibility and appraisal policies. Following the FAQs, the Attachment on page 10 provides Guidelines for Using Market Conditions Addendum to the Appraisal Report (Form 1004MC).

https://www.fanniemae.com/content/faq/appraisal-property-report-faqs.pdf   

My comments: This document does not have a lot of new material, but it is always good to read this so you can cut and paste some of Fannie’s comments into your reports as an explanation. In this month’s paid Appraisal Today I had two articles on the 1004mc form:

1004MC – the good, the bad, and what Fannie says

Statistical errors in the 1004MC by George Dell, MAI, SRA – He has been fighting with Fannie since the form was first required in April 2009

 More articles are coming soon in the paid Appraisal Today on how to handle the issues.

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Tiny ‘Harry Potter-looking’ homes under construction in North Texas

Excerpt:

Builder Rudy Rivas’ newest house would fit inside the master bedroom of the custom homes he constructs in North Texas.

The average new home being built in America is more than 2,700 square feet – the biggest ever.

So why’s a Dallas custom builder starting a 180-square-foot house?

Read more!!

3-10-15 Newz – Pulling permits, Fannie FAQs, Refi revival etc.

Appraisal and Property Related Frequently Asked Questions (FAQs)

February 12, 2016

This FAQ document provides responses to common questions related to Fannie Mae’s property eligibility and appraisal policies. Following the FAQs, the Attachment on page 10 provides Guidelines for Using Market Conditions Addendum to the Appraisal Report (Form 1004MC).

https://www.fanniemae.com/content/faq/appraisal-property-report-faqs.pdf

My comments: This document does not have a lot of new material, but it is always good to read this so you can cut and paste some of Fannie’s comments into your reports as an explanation. In this month’s paid Appraisal Today I had two articles on the 1004mc form:

1004MC – the good, the bad, and what Fannie says

Statistical errors in the 1004MC by George Dell, MAI, SRA – He has been fighting with Fannie since the form was first required in April 2009

More articles are coming soon in the paid Appraisal Today on how to handle the issues.

Read more!!

Newz 3-3-15 Abandoned places, Late appraisal, Cost vs value, Fees

Spam blockers are going wild!!! I have made some changes in subject line and some changes in newsletter content so more subscribers will get this newsletter. I can’t even mention some of the changes as using the words may send this email to spam!!!
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17 abandoned places around the world
Take a break from your appraisals with these Interesting Links!!
 
Here are a few:
1.  House of the Bulgarian Communist Party – Mount Buzludzha, Bulgaria
9. Michigan Central Station – Detroit, Michigan, United States
10. Sarajevo Olympic Bobsleigh and Luge Track – Sarajevo, Bosnia and Herzegovina
Good for taking an appraisal break!!
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Read more!!

AQB – possible changes to college degree, practicum, alternative experience, etc.

AQB wants comments on possible changes to college degree, practicum, alternative experience, etc.
Comments deadline March 31, 2016
College degree – alternative for licensed upgrade to certified
My comments: I keep hearing from appraisers that college graduates have lots of high paying opportunities. But, these types of jobs are only for engineering, computer science, etc. jobs. Some with business degrees from highly rated schools can get “Wall Street” jobs. Not for the vast majority of graduates with degrees in English, psychology, etc. I don’t know how realistic it is to offer a route from Licensed to Certified with no 4 year degree required since few lender clients will accept licensed appraisers and their numbers have dropped significantly.
Practicum – alternative experience up to 50%
My comment: I studied science in college and spent many afternoons in labs. When I graduated I was ready to go to work and needed no training. This is a significant problem for appraisers.
The only appraisal class I ever had with practical experience was a junior college appraisal class taught by a real estate agent. We all appraised his home using Fannie forms. A practicum was offered awhile ago by the AQB but was too difficult to set up and none were ever offered. Hopefully, these new requirements will be easier and, more important, include hands-on appraisal experience.
Click here to read the full document
My comments: Lender appraising has been a boom and bust business since Fannie and Freddie started securitizing loans in the 1960s, requiring armies of new appraisers during the booms with most laid off during the busts. Everyone seems to forget this. The current licensing system does not consider it.
Of course, the biggest problem today is lenders not allowing trainees to sign on their own. Lenders can solve this problem now. The draft recognizes this problem. But, AMCs (low fees and  Scope Creep) are the most significant reason for the “brain drain” of experienced residential appraisers leaving the profession since 2008. Retiring baby boomers is another factor.
Who is worried about an appraiser shortage? The Appraisal Foundation’s income will go down. AMCs will have fewer appraisers to broadcast cheap fees. Finding appraisers in rural areas will be more difficult, but this has always been a problem. Lenders are hoping maybe they can use AMCs or “alternative products” because of the shortage. Of course, not much of this applies to commercial appraising, only to residential AMC work.

Appraisal Today newsletter

NEWZ// 2-4-16 – Adjustments-Unwanted mansions-Why homeowners don’t refi-Loan buybacks

 5 Reasons Homeowners are not Taking Advantage of Refi Opportunities

Excerpts:

Historically low mortgage rates have been circling the housing market for several years now. Low mortgage rates present opportunities for homeowners to refinance their homes, but recent data and analysis shows that they are not taking advantage of billions of dollars in savings.

Although the number of refinancers may appear to be large, it is actually down from over 7 million in April 2015. Black Knight reports that interest rates were under 3.7 percent during this time, and the 20-year rate was 3.96.

Black Knight Data & Analytics SVP Ben Graboske explained, “This population is diminishing, and as mortgage interest rates rise, it will only continue to shrink further.”

Here are the five:

Lower credit scores and income.

Hassle and upfront expense.

Not enough equity.

Inconsistent job history.

Lack of assets.  

Lots more info plus a link to the original study.

http://www.themreport.com/news/data/01-25-2016/5-reasons-homeowners-are-not-taking-advantage-of-refi-opportunities

My comment: interesting analysis plus a link to the nerdwallet full analysis. I have always wondered why so few people are not doing refis with rates still at historic lows.

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 CU Quick Guide Videos Now AvailableNew short videos (~4 min) show how to easily use the Collateral Underwriter® (CU™) web application to research common messages. Watch the Quick Guide Intro to the Comp Selection Message to see how to use CU to review appraisals with a material difference between the appraiser-provided and CU model-selected comparable sale rankings. The Quick Guide to Data Discrepancy Messages shows how to quickly view other appraiser observations when there is a discrepancy in reported data (either from what the appraiser previously reported or from what other appraisers have reported.) Want to learn how other lenders have leveraged CU? Review this new Housing Industry Forum article which details how lenders that maximize the use of CU have been able to make the underwriting process more efficient while improving appraisal quality and reducing appraisal-related loan defects.Additional CU live webinar dates are also now available:

CU User Interface Basic Training: Feb 10, 2016 from 2 – 3:30 p.m. ET

CU User Interface Advanced Training: Feb. 18, 2016 from 2 – 3:30 p.m. ET

Maximize your Appraisal Review Efficiency and Effectiveness with CU: Feb. 24, 2016 from 2 – 3 p.m. ET

For more information on CU visit the CU web page. 

My comment: see how CU works, from the lender side. 

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America’s Most Unwanted: The Neverland Ranch and Other Unsold $100 Million Mega-Mansions

Excerpt:

Michael Jackson’s $100 million Neverland-formally known as Sycamore Valley Ranch-is still stuck on the block.

Listed last May (sans the King of Pop’s amusement park), the 2,698-acre compound in Los Olivos showcases a 12,598-square-foot, French Normandy-style main house with six bedrooms and nine baths. Other structures include three separate guesthouses, a 5,500-square-foot movie theater with a stage, numerous barns, animal shelter facilities, and a maintenance shop.

Check them all out at:

http://www.forbes.com/sites/kristintablang/2016/01/26/100-million-mega-mansions-for-sale-neverland-ranch-jeff-greene-rancho-san-carlos-palazzo-di-amore-le-palais-royal

My comment: if they ever do sell… very, very long exposure times!

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Adjustments – “Support” vs. “Proof, what should you do?

New in the FEBRUARY 2016 issue of the paid Appraisal Today

Adjustments Part 1 – Are you making too many adjustments? Lots of ideas, research, etc.

– Support vs. proof for adjustments by Bob Keith. A very good explanation of Scope Creep on adjustments. He is the former Executive Director 

of the Oregon State Appraisal Board and is a consultant for appraisers with state board complaints

Identifying Residential Architectural Styles by Mark Nadeau,SRA, Book review. Read my review to decide if you want to buy the book.                        

Two good, practical residential books, with very good tips on adjustments  Book reviews. 

The Dictionary of Real Estate Appraisal, 6th Edition – Read my review to decide if you want to buy this book. 

Cancel at any time. For any reason!!

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Fannie, Freddie Unveil New Appeals Process for Loan Repurchases

Excerpt:

Fannie Mae and Freddie Mac unveiled an appeals process Tuesday that will allow an independent arbitrator to resolve disputes between lenders and the government-sponsored enterprises over loan repurchase demands.

The new independent dispute resolution process, which was approved by the Federal Housing Finance Agency and endorsed by the Mortgage Bankers Association, is an effort to provide lenders more certainty that they won’t later face costly repurchase requests if a loan goes bad.

http://www.nationalmortgagenews.com/news/secondary/fannie-freddie-unveil-new-appeals-process-for-loan-repurchases-1071121-1.html

My comment: Maybe lenders will be less paranoid about appraisals causing buybacks and cut back on Excessive Appraisal Requirements.

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One-third of realty transactions are plagued by delays, some of them fatal By Ken Harney

Excerpt:

According to the study, of the 32 percent that experienced delays, 46 percent were triggered by “financing issues,” which is up from 40 percent during the first half of 2015. Appraisal-related problems caused 21 percent of the delays and home-inspection issues in 14 percent. Of the nearly 1 of every 16 (6 percent) of deals that turned into total disasters and fell through, home inspection and financing were the primary culprits. Sixteen percent went south because of the appraisal.

https://www.washingtonpost.com/realestate/one-third-of-realty-transactions-are-plagued-by-delays-some-of-them-fatal/2016/01/19/0d74d684-beb9-11e5-83d4-42e3bceea902_story.html 

My comment: maybe that’s why some AMCs are pressuring/asking for more when you “come in” under the sales price. Their clients, the lenders, don’t like deals falling through…

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Study finds discrepancies between reported and actual home sales prices By Ken Harney

Are some realty agents hyping the pricing information on closed sales they report to their local multiple listing service, or MLS? And if so, should you care?

A first-of-its-kind study by appraisal and real estate experts suggests that maybe they are and maybe you should. Researchers compared closing documents – which are supposed to indicate the final price in sales transactions – with the prices that agents actually reported to their MLS and found that in nearly 1 of every 11 cases (8.75 percent) there were discrepancies. Overstatements of final price exceeded understatements by a ratio of nearly 3 to 1. In one case, the price reported to the MLS was 21.4 percent above the actual closing price.

https://www.washingtonpost.com/realestate/study-finds-discrepancies-between-reported-and-actual-sales-prices/2016/01/26/86d11660-c435-11e5-a4aa-f25866ba0dc6_story.html

My comment: And AMCs worry about discrepancies on public records and appraisers on GLA!! Another reason Big Data (CU) fails and needs appraiser input. 

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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 www.mbaa.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.htm  or send an email to info@appraisaltoday.com . Or call 800-839-0227, MTW 8AM to noon, Pacific time.

Mortgage applications decreased 2.6 percent from one week earlier 

WASHINGTON, D.C. (February 3, 2016) – Mortgage applications decreased 2.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 29, 2016.  The previous week’s results included an adjustment for the Martin Luther King holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.6 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index increased 11 percent compared with the previous week.  The Refinance Index increased 0.3 percent from the previous week to its highest level since October 2015.  The seasonally adjusted Purchase Index decreased 7 percent from one week earlier. The unadjusted Purchase Index increased 11 percent compared with the previous week and was 17 percent higher than the same week one year ago.

The refinance share of mortgage activity increased to 59.2 percent of total applications from 59.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.9 percent of total applications.

The FHA share of total applications increased to 12.9 percent from 12.7 percent the week prior. The VA share of total applications remained unchanged from 11.1 percent the week prior. The USDA share of total applications remained unchanged from 0.7 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 its lowest level since October 2015, 3.97 percent, from 4.02 percent, with points increasing to 0.41 from  0.40 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.  This is the fourth straight weekly decrease for this rate.  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 its lowest level since April 2015,  3.84 percent, from 3.89 percent, with points increasing to 0.26 from 0.25 (including the origination fee) for 80 percent LTV loans.  This is the fourth straight weekly decrease for this rate.  The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.80 percent from 3.83 percent, with points decreasing to 0.35 from 0.38 (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 decreased to 3.22 percent from 3.28 percent, with points remaining unchanged at 0.37 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.00 percent from 3.09 percent, with points remaining unchanged at 0.34 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased 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

 
To purchase the paid Appraisal Today newsletter  go to

www.appraisaltoday.com/products.htm  or call 800-839-0227. 

 

Housing Forecast: The Present is a Lagging Indicator, and Sometimes it Rhymes

Some Very Interesting comments from Jonathan Miller’s Housing Notes

May 8, 2015

Excerpt:

Earlier this week I came across a brilliant tweet – that when applied in the context of housing, spoke for a lot of the gimmicky click-bait research that comprises a large swath of housing market news coverage.

The present is a lagging indicator.

— Pedro da Costa (@pdacosta) May 3, 2015

 

While I plan to use that quote extensively, my favorite remains one by Mark Twain (supposedly). It is especially useful when making comparisons to the the boom, bubble, bust cycle of the prior decade.

History doesn’t repeat itself, but it does rhyme.

I prefer my adapted version:

History doesn’t repeat itself, but sometimes it rhymes.

So much of what we read or think about housing is backward looking or a provides a current view based on a prior event that had a completely different set of circumstance and worst of all, a lack of context. Sound bites relied on by market participants and media often have limited applicability to specific situations and perspectives.

Link to the full Housing Notes issue:

http://us6.campaign-archive2.com/?u=47540980899c1d755b4cddc48&id=9493fa8875&e=e758e759fb

My comment: I love Jonathan Millers writing, speaking etc. The only appraiser I know who is widely quoted, and interviewed, in the media!!

Appraisal Today newsletter

Collateral Underwriter – appraisal access to data and CU

Should CU be transparent? Poll results
Poll results from ICAP poll – Illinois Coaltion of Appraisal Professionals, a very active appraisal political action group. www.icap.com
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Excerpt:
A few of the results of the 10 questions:
Q1 Should Fannie Mae make CU transparent?
Yes – 89%
No – 6%
Uncertain – 5%
Q3 Will CU risk scores cause Lenders and AMC clients to request appraisers to fit comps to the CU model?
Yes – 69%
No – 5%
Uncertain – 26%
Q5 Do you think the intent of CU is to
replace the appraiser?
Yes – 53%
No – 25%
Undecided – 22%
Download the results
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Online petition to allow appraisers access to CU UAD data
ICAP also has a petition to Fannie Mae that created 11/10/14. “Online Petition to allow appraiser access to data they provided through the Uniform Appraisal Dataset (UAD).”
Excerpt:
The GSE’s have mandated that all appraisals be submitted in the UAD format; however, currently there are no plans to provide appraisers access to this data.
This data needs to be provided to appraisers at the beginning of the appraisal process; ensuring transparency, and improving the process by reducing risk to lenders and the general public.
Sign the petition at http://icapweb.com/petition.php  Plus read the very interesting comments from appraisers!!
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My opinion: I support the petition asking Fannie to let appraisers get the data that we submitted!! CU transparency is more difficult, for various reasons.

Appraisal Today newsletter

CU warning messages – grrrr

A few appraisers are reporting getting CU appraisal warning messages from AMCs. Some AMCs get the messages and and some don’t, depending on the agreement with their lender client.

I sorta believed all the “experts” who said CU would not affect appraisers much, except the many us who do not have market based adjustment support in our work files (which we should have always had). “They” said appraisers’ time for responding to AMC questions will not change. Fannie’s reviewers have been using CU for about two years. Some lenders beta tested it. They all liked it. But, I wonder if it was tested with “boots on the ground” appraisers who actually had to respond to the warnings??

In January I wrote up a long CU article for my paid Appraisal Today newsletter. In the February issue I will have another long article, focusing on the differences between the old and new CU warning messages. They are very different. AMCs with access to lender’s warning messages are sending them to appraisers, such as:

Old message (pre-CU): Condition adjustment for comparable property #<comparable number> appears excessive.
New message(CU): The condition adjustment [for comp #X] is smaller than peer and model adjustments
New (CU): The condition adjustment [for comp #X] is larger than peer and model adjustments.

There are other messages about condition ratings different that peers and model.

I don’t know how our “peers” and The Model made their adjustments or ratings and what they are. I don’t know how to respond as to why mine differ.

Now that appraisers are getting the warnings, they are asking how to respond to them. Who are these peers? What is the model? I have no idea how to respond, except to say “I don’t know who the peers are and how they determined condition or what method they used for their adjustment. I am unable to respond.” How do you know what the condition is really like for comps? There are lots of ways to estimate an adjustment for condition. You can explain what you did. But, who is right? You, peers, or model?

MLS is soo reliable (Not) for estimating comp condition. I don’t think they will like “matched paired sales” on all of your responses for the method you used for adjustments.

Looks like maybe there will have to be some webinars for appraisers, not just underwriters, explaining how to respond.

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