AI and Appraisals – the Future

By on August 1, 2025   /   AI, appraisal how to, liability, non lender appraisals, real estate market   /   1 Comment
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Newz: Future of AI in Appraisals,
Comps in Today’s Market

August 1, 2025

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

  • LIA ad: Code violations and expertise
  • The Future of AI in Real Estate Valuations: Understanding Tomorrow’s Appraisal Standards By Leland Trice
  • New York City’s Famous ‘Bubble House’ Hits the Market for the First Time in 50 Years With an Asking Price of $5.8 Million
  • The problem with comps in today’s housing market By Ryan Lundquist
  • Divorce Appraisal: A Guide for Real Estate Appraisers By Kevin Hecht
  • For sale signs multiply: Inventory hits 5-year high, price cuts surge What’s happening with markets all over the country?
  • Mortgage applications increased 0.8 percent from one week earlier

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The Future of AI in Real Estate Valuations: Understanding Tomorrow’s Appraisal Standards

By Leland Trice

Excerpts: The real estate valuation industry stands at a pivotal moment. After decades of relying on manual processes that are inefficient, error-prone, and costly, we’re witnessing a fundamental shift toward AI and technology enabled solutions that don’t replace human expertise but amplify them.

The future of real estate valuations will likely involve increasing integration of human expertise with artificial intelligence capabilities. This evolution isn’t about replacing professional judgment with automated systems it’s about creating hybrid approaches that leverage the strengths of both human analysis and machine processing.

Opteon’s new AI-powered quality control tool, built in collaboration with technology partner Jaro, illustrates this broader evolution across our industry.

It’s important to clarify a common misconception: AI-powered tools like Intara, don’t replace appraisers or QC functions. Instead, they enable Appraisers to focus on what they do best, expert analysis and decision-making, while automating repetitive, administrative and time-consuming tasks that add little analytical value.

The “magic” of AI is its ability to look holistically at a file. We have moved past the days of checklist data review and can now examine unstructured data and images simultaneously and in conjunction with discrete data points.

A critical factor in successful AI implementation is the flexibility to meet varying requirements. Intara demonstrates this principle by embedding lender-specific criteria into quality control processes, automatically identifying discrepancies, and ensuring consistency before reports reach final review.

To read more, Click Here

My comments: This article sometimes reads as a “marketing promotion”. But, worth reading to see how one company uses AI for appraisals and how it is used.

This article goes way beyond Chat GPT. It shows how custom AI applications can work for appraisals. The author, Leland Trice, is Managing Director at Opteon USA.

New York City’s Famous ‘Bubble House’ Hits the Market for the First Time in 50 Years With an Asking Price of $5.8 Million

Excerpts: 4 bedrooms, 5 baths, 4,763 sq.t. Townhouse

The distinctive bubbly residence has become a somewhat divisive hot spot in its Lenox Hill neighborhood, where it was built in 1969, with architect Maurice Medcalfe transforming a traditional brownstone into the eye-popping modernist masterpiece.

Medcalfe’s unique window design was intended to be “a sculptural interpretation of the classic bay window,” according to reports.

There is plenty to play with in the four-story interior, which boasts 4,736 square feet of space and includes four bedrooms, an office, and five bathrooms that are “all in need of renovation,” according to the listing.

To read the listing with 13 photos Click Here

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The problem with comps in today’s housing market

By Ryan Lundquist

July 24, 2025

Excerpts: We have a problem with comps in today’s real estate market. Well, technically the comps aren’t the issue. We’re just not always looking at them in the right way.

1) FOCUS ON THE CONTRACT DATE: Definitely give weight to sales because they actually closed, but ask yourself how much the market has changed since those properties got into contract. Remember, the price was basically established at the contract date (and some negotiation while in contract), so we’re going to focus on the contract date more than the closed date when trying to figure out how different the market is from the time the price was established. In a softening market, if you use a sale from the spring, don’t be afraid to give a negative adjustment to the property to bring it down to what buyers are willing to pay today.

2) LOOK FOR A PATTERN: Don’t hang your perception of value on just one property. We want to look for a group of sales, pendings, and listings. In other words, we don’t want to view one lower pending and base our entire perception of value on that property. That’s not enough data to show a trend. What if that one pending was priced low to generate interest? Or what if it smelled like 20 cats? This is why we want to look for a pattern instead of just one example. It would be like me going to the mall and seeing a teenager sporting a sweet mullet. Does that mean mullets are back in style? Or is it an isolated incident? Seeing one bro with “business in front and a party in the back” isn’t enough to say it’s a trend.

3) GO OLDER & WIDER: There aren’t many sales today, so we may have to look at what’s going on in competitive neighborhoods to wrap our minds around value. We might also have to look at much older sales in the immediate neighborhood to understand how prices have moved…

To read more, Click Here

My comments: Housing markets are hard to figure out in many parts of the country today.

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Annual E&O issue

In the August 2025 issue of Appraisal Today

  • Loose Lips Cause Claims (Loose Lips Lead to Lawsuits) by Clauda Gaglione, Esq.
  • 2025 E&O Insurance Update – Claims, Payment Options, Lawsuits, etc., By Clauda Gaglione, Esq and Magda Pretorius, Risk and Claims Analyst with LIA
  •  2025 E&O Insurance Update – Where to Get E&O Insurance, What to Look for
  •  2025 E&O Insurance Brokers

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Loose Lips – with 3 very good case studies on confidentiality.

Update – Discrimination claims, What if you can’t afford E&O now, Licensing board complaints and good legal advice.

E and O insurance – where to get it, list of brokers, get tail coverage if you’re retiring or quitting, check policy exclusions carefully and more.

Brokers – 7 brokers who have been doing appraiser E&O for a while.

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Divorce Appraisal: A Guide for Real Estate Appraisers

By Kevin Hecht

Excerpts: If you’re a real estate appraiser who typically handles mortgage-based appraisals, consider branching out into the realm of divorce appraisals (otherwise known as an appraisal for marital dissolution). This specialized niche can help you diversify your business while offering a service that’s always in demand.

Divorce appraisals come with their own unique considerations, challenges, and opportunities. Here’s what you need to know.

How Divorce Appraisals Differ from Traditional Mortgage-Based Appraisals

Divorce appraisals are different from mortgage appraisals in terms of the reporting flexibility and scope of work determination.

While mortgage appraisals require specific forms, such as the Uniform Residential Appraisal Report (URAR), divorce appraisals are not bound by these standardized forms. You might choose to use a narrative report, a verbal report, or another format depending on the needs of the assignment (However, please remember that the GSE forms are not appropriate for these types of assignments.).

Common challenges include:

  • Tight court-imposed deadlines
  • Emotional sensitivity
  • Difficulty gaining property access
  • Disputes over property improvements
  • Heightened scrutiny of the appraisal
  • To address these challenges, you’ll need to prioritize communication, documentation, and customer service—three best practices that are more important than ever in a divorce appraisal assignment.

To read more, Click Here

My comments: Few residential appraisers do divorce appraisals. Appraisal and expert witness fees are much higher than lender appraisals.

I have done divorce appraisals and have written about doing them in my monthly Appraisal Today newsletter.

I always assume court testimony will be required, even if the attorney says not. You will need to learn about expert witness requirements. This is why residential appraisers are reluctant to do divorce appraisals. Little competition, of course.

What is great about divorce appraisals: No AMCs, No UAD 3.6, seldom have reviews and much more. I gave up residential lender appraising in 2005.

Death, Divorce and Taxes. Great opportunities For Appraisers!

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For sale signs multiply: Inventory hits 5-year high, price cuts surge What’s happening with markets all over the country?

Buyers gain negotiating leverage in newly balanced housing market

  • 1.36 million homes were for sale in June, the most since November 2019.
  • The market is balanced or in buyers’ favor in 28 of the 50 largest US metros.
  • A record-high 26.6% of listings dropped prices in June; cuts are most common in the Sun Belt and Mountain West.

To read more, Click Here

My comments: This is happening all over the country. Why is it happening? Below is my opinion.

Many people, including myself, have great uncertainty about the effects of tariffs on our economy. I am financially risk averse and have always had my retirement savings in a money market fund. I have no stocks or bonds. I would never buy a home now. I am advising buyers who are risk averse to “wait and see”. If risk averse, sellers should reduce their prices and sell their homes now.

Sellers want to sell for high prices. If not risk averse, today may be a good time to lower their listing price. For some buyers, it is a good time as there are few buyers as competition is lower.

Investors reportedly are buying homes. They are much less risk averse.

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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, Click Here.

Note: I publish a graph of this data every month in my paid monthly newsletter, Appraisal Today. For more information or get a FREE sample go to www.appraisaltoday.com/order Or call 510-865-8041, MTW, 7 AM to noon, Pacific time.

My comments: Rates are going up and down. We are all waiting for rates to drop in 2025.

Mortgage applications increased 0.8 percent from one week earlier

Mortgage applications increased 0.8 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending July 18, 2025.

The Market Composite Index, a measure of mortgage loan application volume, increased 0.8 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 1 percent compared with the previous week. The Refinance Index decreased 3 percent from the previous week and was 22 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index increased 4 percent compared with the previous week and was 22 percent higher than the same week one year ago.

“The 30-year fixed mortgage rate edged higher last week to its highest level in four weeks at 6.84 percent, while rates for other loan types were mixed. Purchase applications finished the week higher, driven by conventional purchase loans, and continue to run ahead of last year’s pace,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “After reaching $460,000 in March 2025, the purchase loan amount has fallen to its lowest level since January 2025 to $426,700. With the 30-year fixed rate still too high to benefit many borrowers, refinance applications were down almost three percent for the week.”

The refinance share of mortgage activity decreased to 39.6 percent of total applications from 41.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.2 percent of total applications.

The FHA share of total applications decreased to 18.7 percent from 19.0 percent the week prior. The VA share of total applications remained unchanged at 12.6 percent from the week prior. The USDA share of total applications increased to 0.6 percent from 0.5 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) increased to 6.84 percent from 6.82 percent, with points remaining unchanged at 0.62 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $806,500) remained unchanged at 6.75 percent, with points increasing to 0.70 from 0.66 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained unchanged at 6.52 percent, with points decreasing to 0.79 from 0.86 (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 6.14 percent from 6.16 percent, with points increasing to 0.69 from 0.63 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.

The average contract interest rate for 5/1 ARMs decreased to 6.01 percent from 6.08 percent, with points decreasing to 0.28 from 0.45 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The survey covers U.S. closed-end residential mortgage applications originated through retail and consumer direct channels. The survey has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks, thrifts, and credit unions. Base period and value for all indexes is March 16, 1990=100.

 

Ann O’Rourke, MAI, SRA, MBA

Appraiser and Publisher Appraisal Today

1826 Clement Ave. Suite 203 Alameda, CA 94501

Phone: 510-865-8041

Email:  ann@appraisaltoday.com

Online: www.appraisaltoday.com

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Top 3 Appraiser Mistakes

By on July 25, 2025   /   ADUs, appraisal how to, bias, liability   /   Leave a comment
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Newz: Top 3 Appraiser Mistakes, Bias Lawsuit Dismissed, ADUs

July 25, 2025

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

  • LIA ad: Why Do Claims Get Settled?
  • Top 3 Mistakes Appraisers Make in Their Appraisal Reports By Bryan Reynolds
  • Founding Father John Hancock’s Boston Home Is on the Market for First Time in Half a Century — More Than 250 Years After It Was Built
  • Appraiser Vindicated: Lanham Discrimination Lawsuit Dismissed in Maryland
  • A Complete Guide to Geocodes
  • Bipartisan legislation would make it easier to finance accessory dwelling units
  • Mortgage applications increased 0.8 percent from one week earlier

Appraiser Mistakes

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Top 3 Mistakes Appraisers Make in Their Appraisal Reports

By Bryan Reynolds

Excerpts: After doing more than 2,000 appraisal reviews over the years, Bryan and his team have seen these same errors crop up again and again. Know them and avoid them.

I was an investigator for the state of Tennessee for many years. These days, I primarily help appraisers who find themselves in trouble. Sometimes we’re successful in resolving the issue entirely, or at least reducing the impact. Other times, it becomes a learning moment — we recognize mistakes, take responsibility, and strive to do better.

Mistake #1: Omitting a key statement about an extraordinary assumption or hypothetical condition

Appraisers can gain some leeway with the right scope of work, and by properly using extraordinary assumptions and hypothetical conditions. But you must meet minimum reporting requirements.

Mistake #2: Not summarizing the results of your analysis of the subject property’s prior sales

Saying “the subject sold last year for $150,000” is not analysis. That’s just a statement of fact. What USPAP requires is a summary of your analysis. You’ve got to explain what that sale means in the context of your current appraisal, not just list the data point.

Mistake #3: Including comps that aren’t really comparable

The 1004 form, or the Uniform Residential Appraisal Report form, is what most appraisers use. This is a form many of you are very familiar with. At the top of page two, it says:

“There are ___ comparable properties currently offered for sale in the subject’s neighborhood, ranging from ___ to ___.”

“There are ___ comparable sales in the subject’s neighborhood within the past 12 months, ranging from ___ to ___.”

Now, if you truly are in an area where all the listings and sales in a neighborhood are in a competitive state for the same properties, then I guess you’d fill that in accordingly. But how often does that happen? I mean, are the two-bedroom homes competing for the same buyers as the four-bedroom homes?

To read more, Click Here

My comments: Definitely worth reading! I would have never thought these 3 were the most common mistakes.

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Founding Father John Hancock’s Boston Home Is on the Market for First Time in Half a Century — More Than 250 Years After It Was Built

Excerpts: Used as offices now, 7,622 sq.ft., 2,178 sq.ft. lot, Originally built in 1660s

The iconic dwelling, which is known as the Ebenezer Hancock House in honor of John’s younger brother who used it while serving as the deputy paymaster of the Continental Army, is thought to have been built in 1767.

According to the listing, which is held by Dave Killen of LandVest, the building is the “last extant property associated with the founding father in Boston” and stands as a living time capsule, having been meticulously maintained by its current owners over the last five decades.

An asking price for the property has not been released, but the structure was most recently valued at $1.65 million by city officials. Given its historical significance, the building could well sell for much more.

The original structure dates to the 1660’s, when the site was owned and occupied by William Courser, Boston’s first Town Crier. In 1737, the property was owned by James Davenport, the brother-in-law of Benjamin Franklin.

To read more and see many interesting photos, Click Here

My comments: Our country’s 250th anniversary is coming. This is a look into when we started.

Read more!! →

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Exposure Time vs. Marketing Time for Appraisals

By on July 18, 2025   /   appraisal business, appraisal how to, bad appraisers, bias   /   Leave a comment
Tags: , , ,

Newz: HUD and OMB PAVE Rollback, Appraiser Appraisal Capacity, Fraud Alert

July 18, 2025

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

  • LIA ad: Can’t Certify the Work
  • Exposure Time vs. Marketing Time: Why the Clock Matters in Appraisals By Jamie Owen
  • Historic Beachfront Water Tower That Has Been Transformed Into a Sky-High Home in California for $5.5 Million
  • Freddie Mac. Appraiser Capacity
  • HUD and OMB Begin Rollback of PAVE Task Force
  • Fraud Alert: Some Non-QM Lenders Excluding Loans Involving Certain Appraisers, Borrowers
  • Mortgage applications decreased 10.0 percent from one week earlier

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Exposure Time vs. Marketing Time: Why the Clock Matters in Appraisals

By Jamie Owen

Excerpts: Exposure Time: The Clock That Ticks Backward

Imagine standing in the kitchen of a colonial in Gordon Square that just sold last week. The buyers are thrilled, the sellers are relieved, and the agent is probably already on to the following listing. But in that moment, the appraiser has to ask: how long would this house have needed to be on the market to attract a willing buyer and sell at that exact price?

That’s exposure time—the hypothetical time the property was exposed to the open market before the sale, assuming it sold for fair market value.

Appraisers include this estimate to show that the sale wasn’t rushed, distressed, or out of step with the broader market. It’s a way of saying: “This was a typical deal in a typical market, and the sale price reflects that.”

Marketing Time: The Clock That Ticks Forward

Let’s shift the scene. You’re standing in the living room of a Cleveland Heights Tudor, preparing an appraisal for a homeowner who’s thinking about listing soon. They want to know not just what it’s worth today, but how long it might take to se

My comments: Worth reading. Excellent understandable article and graphic above. Good Case Study (A Hypothetical Example). Written for home owners, real estate agents, etc. but a good review for appraisers. This topic can be confusing for appraisers.

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Historic Beachfront Water Tower That Has Been Transformed Into a Sky-High Home in California for $5.5 Million

Excerpts: The historic Seal Beach Water Tower dates to 1892, when it was built to hold water for passing steam engines, a role that it held for nearly 100 years.

In 1985, it was converted into a 2,828-square-foot, single-family residence that quickly became one of the most talked-about dwellings in Seal Beach. The interest appears to be alive and well 40 years later, with the home quickly shooting to the top of the week’s most popular homes list.

History buffs will love the four-bedroom home’s period details, including a vintage tool display “unearthed during the 1940s tribute” and a bedroom “themed after the only known pirate to haunt these shores.”

Other eye-catching updates include a foyer water feature; an elevator and circular staircase for easy access; a compass rose design found in the hardwood floors; a third-floor modern kitchen; a model train “weaving through the rafters”; a fifth-level, open-air rotunda; and a stained-glass cupola.

To read the listing and see 74 photos, Click Here

My comments: Very interesting! Check out the photos. I love the elevator: a long way to the top…

Read more!! →

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Neighborhood Analysis Matters for Appraisers

By on June 27, 2025   /   appraisal how to, GSEs, liability, New URAR   /   Leave a comment
Tags: , , ,

Newz: Neighborhood Analysis, Death of the Appraisal Clipboard

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

  • LIA AD: Can’t Certify the Work
  • Why Neighborhood Analysis Matters: Avoiding Costly Appraisal Mistakes By Timothy Andersen, MAI
  • See the Churches That Make Divine and Affordable Homes
  • Pulling comps in a softer market By Ryan Lundquist
  • The Future is Now: Fannie Mae and Freddie Mac Announce UAD 3.6 Implementation Timeline and Policy Changes
  • The Death of the Appraisal Clipboard By Tony Pistilli
  • Mortgage applications increased 1.1 percent from one week earlier
Appraisal Neighborhood Analysis

 

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Why Neighborhood Analysis Matters: Avoiding Costly Appraisal Mistakes

By Timothy Andersen, MAI

Excerpts:

Neighborhood analysis is a critical component of real estate appraisal, providing insights into factors that influence property values, risk analysis, and investment decisions. A comprehensive neighborhood analysis involves delineating precise boundaries, understanding property types and architectural styles within those boundaries, assessing land use changes, and evaluating current and future economic trends.

Topics:

  • Defining Neighborhood Boundaries
  • Assessing Neighborhood Characteristics
  • Monitoring Land Use and Development Trends
  • Evaluating Economic Trends

Implications for Appraisers

Neglecting a detailed neighborhood analysis as part of the appraisal can lead to inadequate appraisal reports, potentially resulting in critiques from reviewers or issues with compliance standards (i.e., a state appraisal authority). Appraisers are advised to conduct meticulous neighborhood analyses, ensuring their reports reflect current market conditions and property characteristics accurately.

To read more, Click Here

My comments: Well written and worth reading. Includes references. Defining the neighborhood is critical for all types of appraisals. This article focuses on residential, but the topics apply to commercial and other uses.

The neighborhood is where you first look for comps and do the analyses above. Going to a similar neighborhood for comps may be needed, but can be tricky.

Read more!! →

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Appraiser-Client Relationships for Appraisers

By on June 20, 2025   /   appraisal business, bias, liability, state appraiser regulators   /   1 Comment
Tags: , , ,

Newz: WA appraisers fee hikes, AI and an appraiser defense

June 20, 2025

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

  • LIA Ad: Protecting My Appraisal Report
  • How to Build Strong Appraiser-Client Relationships
  • Cardiologist Lists Glass Mansion in Jackson Hole for $60 Million
  • WA Appraisers Stung by Fee Hikes and Veto
  • FOIA, AI, & the Appraiser’s Defense: A Blueprint for Fighting Back
  • MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey

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Real Estate Agents and Comparable Sales – Tips for Appraisers

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How to Build Strong Appraiser-Client Relationships

Excerpts: The most successful appraisers are those who consistently bring in new clients. Are you looking to earn more referrals and repeat business? Start by fostering good relationships with your appraisal customers. Taking the time and effort to build strong appraiser-client relationships is a great way to establish a good reputation and distinguish yourself from the competition so that you can easily generate new business through client referrals and word-of-mouth.

Not sure where to begin? To help you out, we asked our community of real estate appraisers, “Which is MOST important for building strong appraiser-client relationships?” Read their responses below for insights into several effective strategies you can use to keep your customers happy and keep business flowing.

Produce credible, high-quality work (47%)

Have clear communication (20%)

Be courteous and professional (11%)

Deliver reports on time (7%)

Go above and beyond (4%)

Other (7%)

To read more, Click Here

My comments: Worth reading the appraiser comments.

Read more!! →

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What’s a comparable property for appraisals?

By on June 13, 2025   /   appraisal, bias, Fannie, liability, real estate market   /   Leave a comment
Tags: , , , ,

Newz: Q2 Fannie Appraiser Update, Appraiser Wins Discrimination Lawsuit

June, 13, 2025

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

  • LIA ad: Am I Still on the ‘Do Not Use’ List?
  • What’s a comparable property? Or a “comp,” as we say more informally? By Bryan Reynolds
  • Rotterdam’s Yellow Cube Homes
  • Q2 2025 Fannie Mae Appraiser Update – UAD 3.6
  • A Back to the Future Housing Market By Ryan Lundquist
  • Case Dismissed: Ohio Appraiser Wins Discrimination Lawsuit by Isaac Peck
  • Mortgage applications increased 12.5 percent from one week earlier

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Real Estate Agents and Comparable Sales – Tips for Appraisers

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What’s a comparable property? Or a “comp,” as we say more informally?

By Bryan Reynolds

Excerpts: Let me give you an example of an appraisal report I saw recently, which is why I’m asking this question: There are 65 comparable properties currently offered for sale in the subject’s neighborhood, ranging from a price of $330,000 to $5,400,000. The report also states that there are 44 comparable sales in the subject’s neighborhood within the past 12 months, ranging from $152,000 to $2.2 million. That’s a big range. Are you comfortable putting that in your report?

What does the term “comparables” even mean? Let’s go to the authoritative sources. Here’s one: The Dictionary of Real Estate Appraisal, published by the Appraisal Institute. It defines comparables as “a shortened term for similar property sales, rentals, or operating expenses used in the comparison in the valuation process and best usage. The thing being compared should be specified.” In other words, are you looking at comparable sales, comparable rentals, or comparable listings?

Lastly, I’m going to pull up the Encyclopedia of Real Estate Appraising. It’s a great big book, and it has a whole section on this. I highlighted one part of it because I like it: “What is a comparable property? It is one that would be a reasonable alternative for most prospective buyers who would be interested in the subject property.”

What is a comparable property? It is one that would be a reasonable alternative for most prospective buyers who would be interested in the subject property.” —Encyclopedia of Real Estate Appraising

That’s very simple, and it invokes some good, common sense

To read more, Click Here

My comments: Lots of opinions on this topic!

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29008552 – innovative yellow cubic houses built in rotterdam

Rotterdam’s Yellow Cube Homes

Excerpts: Both a popular tourist attraction and a strange architectural experiment, the cluster of 39 homes stands out amongst the city’s mostly modern architecture. However, that is what makes these “cube-perched-on-a-point” homes all the more interesting.

he elevated cubes are essentially houses supported on hexagonal piers; this design frees up the ground space for public use. Each cube measures 72 feet in height with each side measuring 25.5 feet. While the pillars and floor are made from reinforced concrete, structural wooden skeletons from the base for constructing the cubes were mounted on the floors’ edges. Interestingly, cement panels with rockwool insulation in the middle resulted in cutting down on almost all exterior sounds.

Inside, the complicated form meant that the interior walls were angled at 54.7 degrees with the floor. The consequences of this construction detail is that 25% of the almost 1,100-square-feet of living space is unusable because of the angular walls. The interior is divided into three floors that are connected by a narrow wooden staircase. The ground level houses in the living room and an open kitchen with plenty of windows. The second floor has two bedrooms, a bathroom, and a small living area. Finally, the third floor is a three-sided pyramid that can be used as a bedroom or an office.

To read more and see interior photos and floor plans, Click Here

My comments: Fascinating, with very good photos.

Read more!! →

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ChatGPT for Appraisers

By on May 16, 2025   /   AI, appraisal business, liability, new appraisers, New URAR   /   Leave a comment
Tags: , , , , ,

Newz: Appraisers using ChatGPT,
Appraiser Salaries, PAREA Problems

May 16, 2025

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

  • LIA ad: Appraisal Used in Divorce Case – Now What
  • The Power of AI Is Not Absolute Using Chat GTP for Appraisers
  • Retired Maine Railroad Caboose
  • [Updated 2025] What’s the Average Real Estate Appraiser Salary?
  • Indemnification Clauses: What Appraisers Should Know
  • Treasury yields surge, but Fed rate cut odds decline after U.S.-China tariff pause. Mortgage rates may be poised to rise following de-escalation of tariff tensions
  • The PAREA Program: Costly Promises, Empty Support
  • Mortgage applications increased 1.1 percent from one week earlier

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The Power of AI Is Not Absolute
Appraisers Using ChatGPT

Excerpts: With the great power of artificial intelligence comes the responsibility to fact-check.

Artificial intelligence (AI), particularly ChatGPT, has captured the attention of professionals across various industries, including residential appraisal. With ChatGPT now reaching more than 100 million weekly users, according to OpenAI CEO Sam Altman, it’s clear that AI is poised to become a mainstay in our digital toolkit.

ChatGPT is an AI chatbot, powered by a large language model (LLM), which can comb through a vast amount of information and generate text in response to a question or prompt. This ability led me to explore its potential in “seeing” and evaluating property photos, which ultimately inspired me to create the RoboRater tool.

There were some early hiccups — and a learning curve — when I began prompting the AI tool to apply Uniform Appraisal Dataset (UAD) quality and condition ratings to what it “saw” in property photos. And then, in November 2023, Open AI introduced a feature allowing pro users to develop a custom generative pre-trained transformer (GPT), which led to a breakthrough. It enabled me, with no coding background, to tailor a specific version of ChatGPT that excels at assessing kitchen quality and condition ratings from photos, complete with insightful supporting commentary.

ChatGPT as a Writing and Public Relations (PR) Assistant

ChatGPT can also be an invaluable writing assistant and PR specialist, especially in sensitive communication scenarios like Reconsiderations of Value (ROV). It can skillfully rephrase blunt feedback into professional, constructive commentary.

Other topics:

Enhancing Clarity in Technical Reporting

Optimizing Appraisal Business Operations

Navigating the Limitations

To read more, Click Here

My comments: This is the most practical article I have read for appraisers using ChatGPT with good appraiser examples. I am going to start using it soon! Tim Andersen, the USPAP expert, recently wrote an article for Appraisal Today using ChatGTP.

AI does not always work out well.

For example. State Bar of California admits it used AI to develop exam questions.

Nearly two months after hundreds of prospective California lawyers complained that their bar exams were plagued with technical problems and irregularities, the state’s legal licensing body has caused fresh outrage by admitting that some multiple-choice questions were developed with the aid of artificial intelligence.

Read more!! →

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Surplus vs. Excess Land for Appraisers

By on May 2, 2025   /   Economic analysis, GSEs, liability, Mortgage interest rates, New URAR   /   Leave a comment
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Newz: Surplus vs. Excess Land, Interest Rate Drop? GSE Oversight?

May 2, 2025

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

  • LIA ad: Am I Still on the ‘Do Not Use’ List?
  • Surplus Land vs. Excess Land: What Appraisers Needs to Know
  • 5 Mind-Boggling Optical Illusion Houses That Have To Be Seen To Be Believed
  • Fed officials offer differing signals on timing of potential interest rate cuts
  • Fed seen cutting policy rate by a full percentage point this year
  • The Balancing Act: How Appraisers Can Navigate Supply Shortages, Interest Rates, and Tariffs
  • A Cry from the Appraisal Trenches: The Fall of GSE Oversight
  • Mortgage applications decreased 4.2 percent from one week earlier

Surplus vs. Excess Land for Appraisals

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Surplus Land vs. Excess Land: What Appraisers Needs to Know

By Kevin Hecht

Excerpts: Land valuation is a fundamental aspect of real estate appraisal, influencing property transactions, development decisions, and investment strategies. A key part of the process involves distinguishing between the land that supports the property’s current use and any additional land that may—or may not—have independent value.

Commonly, a square footage adjustment is made based on lot size differences among comparable properties without one key distinction – whether the difference in land is surplus or excess land. This fails to consider whether the extra land has value independent of the subject property.

Surplus land and excess land are often confused. Surplus land is land which adds no value independently of the property being appraised. Excess land, on the other hand, has value because it can be divided and sold separately. These distinct differences must be accounted for in an appraisal.

Here we will discuss what constitute excess and surplus land, common methods used to identify each, and why it matters….

Methods for Identifying Surplus vs. Excess Land

Residential appraisers commonly make a dollar per square foot adjustment for differences in lot size among comparable properties without distinguishing whether the land is surplus or excess. The problem with this approach is that it fails to consider highest and best use where excess land—land that can be independently sold or valued—creates a premium.

This question cannot be answered without evaluating zoning and legal restrictions of the property.

For example, just because a property is large enough to support a second structure, zoning may prohibit multiple residences on a single lot or there may be legal restrictions in terms of land coverage and minimum square footage requirements. If this were the case, it would be considered surplus land.

When determining if land is excess land, appraisers must consider legal permissibility, physical possibility, financial feasibility, and profitability.

To read more, Click Here

My comments: Read this blog post. Residential appraisers can easily make a mistake on this topic and get into trouble.

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5 Mind-Boggling Optical Illusion Houses That Have To Be Seen To Be Believed

Excerpts: Photo above info:

2. 8198 Uphill Rd, Joshua Tree, CA

Price: $17,950,000

The Invisible House: This mirrored mansion is the brainchild of film producer Chris Hanley and Frank Gehry collaborator Tomas Osinski, who designed the home to seemingly vanish into its desert surroundings.

At first glance, you might not notice the 5,470-square-foot residence staring back at you. Nestled on 67.5 acres, the shimmering structure was created with the intent of connecting its residents with the desert through the mirrored glass exterior. The three-bedroom estate’s interior is just as astonishing featuring retractable glass walls; a 100-foot, heated indoor swimming pool; and a 224-square-foot, white wall designed for movie screenings.

Whether you are looking for a home that quite literally disappears into the Arizona desert or one that mirrors its landscape in the Hamptons, these works of jaw-dropping art not only offer a captivating design but a remarkable setting.

From California to New York, we found five optical illusion abodes that will leave you wondering if they are playing tricks on your eyes.

To read more, Click Here

My comments: Click on the addresses for the listing. I have written about some of these before. I am fascinated by these types of homes. Now you can see 5 of them in one link. My favorite is the home in the photo above.

Read more!! →

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Manufactured Home Appraisals

By on April 11, 2025   /   appraisal how to, GSEs, HOME INSURANCE, liability, New URAR   /   Leave a comment
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Newz: Appraisal Cartoon, Manufactured Homes,
Homes Lacking Insurance

NOTICE: Our Email was down from April 3 – April 9.

Our apologies for any bounced emails.

April 11, 2025

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

  • LIA ad Protecting My Appraisal Report
  • Appraising Manufactured Homes – What Fannie Says, Demographics
  • The Vermont Earth Home, the Dome Home, the Vermont Mud Hut…
  • Very funny appraisal cartoon – Magician Explains Time Adjustments!
  • How Many U.S. Homes Lack Insurance?
  • What Are the Appraiser Independence Requirements?
  • Mortgage applications increased 20.0 percent from one week earlier

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Appraising Manufactured Homes – What Fannie Says, Demographics

Excerpts: MH Advantage is an innovative homeownership option that pairs affordable financing with specially designated manufactured housing features typical of site-built homes.

Completing an MH Advantage appraisal requires the knowledge and experience to fully understand the unique construction process of this type of manufactured home. Appraisers must know the manufacturers’ and federal, state, and local requirements for both construction and installation.

The requirements for an MH Advantage appraisal are similar to the requirements for a standard manufactured home. Featured differences include:

Appraisers must include photos of the HUD Data Plate, HUD Certification Labels, and MH Advantage Sticker as well as the driveways, sidewalks, and detached structures located on the site.

To read more, Click Here

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Manufactured Homes: An Alternative Means of Housing Supply – Demographics

Excerpts: Manufactured homes play a measurable role in the U.S. housing market by providing an affordable supply option for millions of households. According to the American Housing Survey (AHS), there are 7.2 million occupied manufactured homes in the U.S., representing 5.4% of total occupied housing and a source of affordable housing, in particular, for rural and lower income households.

Given that most manufactured homes were produced in the 1990s, a significant portion of the existing manufactured home stock — approximately 72.2% — was built before 2000. Consequently, 7.7% of these homes are classified as inadequate compared to 5% of all homes nationwide. About 2% are considered severely inadequate and exhibit “major deficiencies, such as exposed wiring, lack of electricity, missing hot or cold running water, or the absence of heating or cooling systems”. However, with proper maintenance, manufactured homes can be as durable as site-built homes.

The East South Central division (Alabama, Kentucky, Mississippi and Tennessee) have the highest concentration of manufactured homes, representing 9.3% of total occupied housing. The Mountain region follows with 8.5%, while the South Atlantic region holds 7.7%.

To read more and see excellent illustrations, Click Here

My comments: If you live in an area with manufactured homes, these two articles can help.

In my urban area I have appraised a few homes built in cities where there were very few manufactured homes.  In some areas there are many more. My brother lived in a semi-rural area, north of San Francisco. A while ago there was a major fire destroying many homes. Owners who wanted a quick rebuild, chose manufactured homes. They were allowed on many of the parcels for many years.

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Appraisal Time Adjustments

By on March 28, 2025   /   adjustments, FHA, GSEs, liability, time adjustments   /   Leave a comment
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Newz: Time Adjustments, Fannie Condo “Blacklist”, Future of GSEs?

March 28, 2025

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

  • LIA ad: Navigating Value Revisions
  • On Time Adjustments By Timothy Andersen, MAI
  • 19.5 Million Arizona Airpark Mansion Boasts Private Jet Hangar, Indoor Shooting Range, and 11 Bathrooms — but Only 3 Bedrooms
  • Pulte has no plans to lower conforming loan limits for Fannie and Freddie
  • Fannie Mae’s Condo “Blacklist”
  • FHA rescinds mortgage appraisal policies aimed at countering bias (update on last week’s newsletter topic)
  • Fannie, Freddie face uncertain futures, potential jobs cuts
  • Mortgage applications decreased 2.0 percent from one week earlier

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On Time Adjustments

Timothy Andersen, MAI, MSc., CDEI, MNAA

Excerpts: Typically, this time starts when the comparable goes under contract, then ends on the effective date of the appraisal. If the market has measurably changed over that period, that change means the appraiser should market-adjust the comps up- or downward, as the market demands¹.

This analysis reveals yet another dilemma. For example, to conclude prices went up twelve per cent (12%) per year is a simple average increase of one percent per month, or a daily factor of (0.12 ÷ 365 =) 0.000329. This simplistic analysis means that for a sale that went under contract at $400,000 42-days ago, the increase factor would be $400,000 X 0.000329, or an increase of $131.51 times 42-days or $5,523. This rationale is mathematically correct.

But our training must govern here and force us to ask the question, “Does this adjustment protocol reflect current market verities?” If not, then following this protocol is, in effect, to guess at a time adjustment. To guess at the time adjustment is to fail to reflect market trends truly and correctly. To fail to reflect them truly and correctly in the final value opinion is to mislead the client. See the dilemma?

Does USPAP² offer any advice on this issue? No. USPAP does not even use the word adjustment (or any of its derivatives) until AO-13.

To read more, Click Here

My comments: Good analysis of the current time adjustment issues. Using only an annual increase (Like most of us were trained to do) is not very accurate. Tim writes, teaches USPAP and advises appraisers on how to do better reports. He is a USPAP Expert. Tim is a regular contributor to the monthly Appraisal Today.

Read more!! →

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