GSE Appraisal Reports Online

What’s in This Newsletter (in Order)

  • Confirming Construction Progress
  • The New UAD: “Don’t Borrow Trouble.”
  • Nicolas Cage’s Former New Orleans Mansion Lost to Foreclosure listed for $10,250,000
  • When will interest rates drop?
  • Who will refi when rates are lower?
  • Uncovering Flaws in FHA Appraisal & Loan Review Process
  • Home Insurance: It’s Not The Hurricanes In High-Cost Areas, But The Tornados In Low-Cost Areas That’ll Get You By Jonathan Miller
  • Iconic ‘Constellation 167’ House in Los Angeles for $10.9M
  • Mortgage applications increased 3.9 percent from one week earlier
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UAD and Forms Redesign Update for Appraisers (from 12-15-23)

Appraisal Business Tips 

Humor for Appraisers

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

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The New UAD: “Don’t Borrow Trouble.”

By Ernie Durbin, July 15, 2024

Excerpts: Reflecting on one of my father’s favorites, “don’t borrow trouble,” I find his advice particularly relevant today. It reminds me to focus on the present and not jump to conclusions about future uncertainties. What he was trying to convey was to trust in my abilities to handle challenges if and when they arise, rather than assuming the worst.

Many in our industry are “borrowing trouble” when they prematurely conclude that the new UAD and GSE report writing requirements will be detrimental.

The problem is… it’s not a form. The new Uniform Residential Appraisal Report (URAR) is an appraisal report expressed as a form. This may seem like semantics, but it is a very important distinction. Although the UAD data set is all-inclusive of property types, only the data points necessary for a specific property need to be reported.

The dynamic nature of the new report will result in “form” outputs that are remarkably shorter than the early examples provided by the GSEs. As an example, if the income and cost approaches are not necessary for credible results, these elements will not be included in the appraiser’s workflow or the final URAR.

To read more, Click Here

My comments: Worth reading. Current forms date back to 2005. A lot has changed since then, but somehow, we have to put it into our appraisal reports. I much prefer the “Turbo Tax” model where you only see what is relevant for what you are appraising. Changes to the software can be made at any time.

I am looking forward to online software for appraisal reports. Since 2006, I have used Constant Contact for this newsletter, which is completely online. Changes, when needed, such as additional features, can be done easily. With Office 360, Word and Excel software is online. I can work on any computer, anywhere. Of course, I have other software on my computers, including Excel and Word, if my Internet goes out ;>

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Nicolas Cage’s Former New Orleans Mansion Lost to Foreclosure listed for $10,250,000

Excerpts: 8 bedrooms, 8.5+ bathrooms, 10,284 sq.ft., 4,140 sq.ft. lot, built in 1832

Located in the famous French Quarter, the grand property once owned by actor Nicolas Cage offers a three-story primary structure connected to a four-story service wing. Elegant details include double parlors, a billiard room, spiral central staircase, and second-floor dining room. Plus, the wraparound balcony, rooftop deck, and brick courtyard offer beautiful views of the neighborhood.

The legendary property is owned by energy trader Michael Whalen, who gave the place a massive renovation after buying it in 2010 for $2.1 million. According to The Wall Street Journal, updates include the addition of a 2,000-bottle wine cellar and a stylish speakeasy accessed via a mirror in the primary bedroom.

According to local lore, when a fire burned down the original building in the 1830s, it was revealed that owners Delphine Macarty LaLaurie and Dr. Louis LaLaurie apparently were abusing enslaved people when they lived there. The LaLaurie family sold the land, and the home has since been rebuilt. Its ghastly past is said to have inspired a season of the television series “American Horror Stories.”

To see the listing, with a virtual tour and 60 photos, Click Here

My comments: The French Quarter is a Very Special and Unique place. I have been to New Orleans three times and stayed first at the classic Montelone Hotel, next rented a room in a large classic historic home, and finally stayed at a recently renovated hotel across the street from the French Quarter.

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When will interest rates drop?

Traders Pricing in 100% Chance Fed Will Cut Interest Rates in September

Fed Fund Futures Show Expectations for Multiple Cuts Before End of the Year

      • Traders are pricing in a 100% chance of a rate cut at the Federal Reserve’s September meeting.
      • Fed officials themselves have said their decision will be based on economic data and do not have a timeline for rate cuts.
      • Futures data also shows that traders expect the Federal Reserve to keep cutting rates once it starts.

Market participants are increasingly convinced that the Federal Reserve will start cutting its benchmark interest rate in September, with more cuts to follow before the end of the year, even as Fed officials say they need to see more economic data before adjusting policy.

To read more, Click Here

My comments: I can’t wait for rates to drop, especially for mortgages! Of course I won’t be getting 5% on my retirement account money market low risk accounts. The real estate market (and appraisal businesses) are pretty messed up now. Looking forward to more better markets.

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ICE Mortgage Monitor – Who will refi when rates are lower?

      • According to ICE Mortgage Technology data and analytics, as of May, 24% of mortgage holders had current interest rates of 5% or higher, up from 10% two years ago
      • Four million loans originated since 2022 have rates of 6.5% or higher – 1.9M at 7%+ – providing modest opportunity for growth in the number of mortgage holders with incentive to refinance as rates ease
      • An average of ~240K mortgages sit in each 1/8th of a percent rate band from 7-7.625% providing only modest increases to the number of in-the-money mortgages as those loans gain refinance incentive
      • There’s a spike of 690K loans with rates just below 7%, driven in part by borrowers buying down their rates for the comfort of an interest rate that starts with a 6, which could be a tipping point to more meaningful, albeit still modest, refi activity as those borrowers gain incentive to refinance

To read more, Click Here

My comments: Lots of refis and sales are coming. More work for appraisers!!

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How to communicate with appraisers online. What’s the best for you?

Excerpts:

Why connect with other appraisers online?

There are numerous reasons, especially since many appraisers work solo: get and give advice, see if other appraisers are busy or slow, AMC/client issues, USPAP, Fannie, etc. You can do it any time, at your convenience. You can spend just a little time or lots of time. I discuss many in this article. See which ones you like and try one or two.

Search the services (email discussion groups, Facebook, etc.) for other groups. For example, searching email discussion groups or Facebook for the word appraiser resulted in many groups, many of them very small and with little or no recent activity. Searching by “latest activity” is a good idea to find out how active they are. Each online group is different.

Appraisers use many communication methods, including blogs, YouTube videos, web-based forums, email discussion groups, private email lists, and podcasts. Almost all allow comments.

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Please hit the reply button if you have any comments or info on any topics. I’m always looking for something new ;>

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Uncovering Flaws in FHA Appraisal & Loan Review Process

By AppraisersBlogs, July 15, 2024

Excerpts: The story of this single mother’s harrowing experience with a defective home purchase and HUD’s negligent oversight exposes deep flaws in the FHA appraisal and loan review process.

After sacrificing for years to rebuild her credit and earn the right to become a homeowner, this borrower found her dream home in the country – or so she thought. During the home inspection, several issues were flagged. The seller, an investor who had purchased the home in an estate sale, was unaware of the system’s location. The seller agreed to pump the tanks so the area could be determined.

When the AMC appraiser arrived, the septic tank had been located and left uncovered for the appraiser to observe. Despite this, the AMC appraiser marked the home as having public water and sewer, failing to note the FHA’s minimum property requirements for the distance between the well and septic. The appraisal was approved, and the home closed.

Three months later, the borrower began experiencing plumbing issues and learned the well and septic system needed to be completely replaced at a cost exceeding $100,000.

Ultimately, the courts sided with the lender and appraiser, leaving the borrower and her children homeless and financially devastated. HUD’s response to inquiries revealed that the defect categorization was improper and the lender should have been required to mitigate the issue, but the agency has done nothing to rectify the situation.

In her own words, the following is her story:

“Losing the Battle to Win the War: How a single mother of two’s refusal to quit exposed HUD’s defected defect taxonomy …

To read more, Click Here

My comments: Long, but worth reading, plus the 25+ appraiser comments.

One of the most significant reasons for appraiser lawsuits is septic tank issues. Be careful out there! I used to live and appraise in Chico, a northern California town with only septic tanks and no sewers. After we purchased our home, we found out there were two septic tanks, one located on an adjacent property. I have seen specific streets in developed cities without public sewers.

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Home Insurance: It’s Not The Hurricanes In High-Cost Areas, But The Tornados In Low-Cost Areas That’ll Get You

By Jonathan Miller, July 16, 2024

Excerpts:

      •  Home insurance costs are heavily influenced by how tough the state regulators are.
      •  Relationships between cost and risk of the location are becoming disconnected.
      •  Insurance such as protection against wildfires, is now unavailable in some markets.

Climate Change Is An Insurance Thing

The before and after photos of this Nantucket home over 26 years are shocking. (see photo above)

The headline of this recent article screamed at me: Our home was worth $2m. We were forced to sell it for a tenth of that. After looking at the before and after photos, I think I understand why someone would pay $200,000 for a home that is likely going out to sea in about two decades. That price works out to about $10,000 per year which seems reasonable as an annual lease rate for the location – assuming the erosion rate doesn’t accelerate. The hard part is going into this deal knowing the home has a finite ending and there is no passing it along to their family.

To read more, Click Here

My comments: Worth reading, plus the images. A good summary of the issues.

About 20 years ago, I spent a week on Nantucket in a Bed and Breakfast next to the boat harbor and drove around in my rental car. It was beautiful!

Sea-level rise affects homes on the water all over the U.S. coasts. As temperature increases, sea levels rise. The Atlantic Ocean is getting warmer than the colder Pacific Ocean, with more homes affected. Also, the waterfronts are lower, as the East Coast is older geologically. The West Coast is much newer, with many properties on the coast well above sea level, especially in Northern California.

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Iconic ‘Constellation 167’ House in Los Angeles for $10.9M

Excerpts: 4 bedrooms, 5 baths, 5,476 sq.ft., 0.27 acre lot, built in 1991

The first residence drafted by world-renowned designer Eric Owen Moss is up for grabs in L.A.—with a $10,950,000 price tag.

Known as Constellation 167, this visually arresting home was completed in 1992 and restored by its current owner between 2011 and 2014. The updates include the addition of a high-end, lagoon-shaped pool.

The property first hit the market last fall for $11,995,000. But without a taker, the home came off the market at the end of last year, only to resurface a month ago.

Moss’ work has long been more than a means to an end—what would typically just be a finished building—and is instead part of a larger ideological framework that sees architecture as an art form that can revitalize neighborhoods or create stunning spaces that bring nature and life together, as it does at Constellation 167.

The dwelling’s smooth, sugary concrete exterior angles and curves converge atop a skyward dome. The exterior walls are stucco, with poured-in-place concrete, and the roof features structural glass, standing-seam metal, and conical configuration.

“We call it Constellation 167 due to its interstellar design,” Forster Jones says. “It’s an address from another world or universe. The name also leans into the home’s one-of-a-kind design. Its otherworldly shape is concealed by a surrounding lush paradise, with a $500,000, 50-foot-by-10-foot lap pool.”

The home was reconstructed by its current owner, German-American model and actress Nicole Nagel (of TV shows “ER” and “Suddenly Susan”), Forster Jones notes.

Nagel restored the home over several years, returning it to Moss’ original vision, which includes the enormous lagoon with a lap pool and a Baja shelf. There’s also a spa with a lounging area and an outdoor barbecue area with refrigerator drawers and a stove.

To read more, Click Here

To see the listing, with a video tour, Click Here

My comment: Check out the photos. Very interesting!

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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. Many appraisers are not busy. Some are busy, usually with non-lender appraisals.Mortgage applications increased 3.9 percent from one week earlier

Mortgage applications increased 3.9 percent from one week earlier

WASHINGTON, D.C. (July 17, 2024) — Mortgage applications increased 3.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending July 12, 2024.

The Market Composite Index, a measure of mortgage loan application volume, increased 3.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 30 percent compared with the previous week. The Refinance Index increased 15 percent from the previous week and was 37 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index increased 22 percent compared with the previous week and was 14 percent lower than the same week one year ago.

“Mortgage rates declined last week, as recent signs of cooling inflation and the increased likelihood of Fed rate cuts later this year pulled them lower. The 30-year fixed rate declined to 6.87 percent, the lowest rate since March 2024,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Application activity was up 4 percent, driven by a 15 percent jump in refinances to the highest level since August 2022. While FHA and VA refinance applications accounted for a significant share of the increase, these are likely recently originated loans with even higher than current offered rates. Even with last week’s rate decline, purchase applications continue to lag, down 14 percent compared to last year’s pace.”

The refinance share of mortgage activity increased to 38.8 percent of total applications from 34.9 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.8 percent of total applications.

The FHA share of total applications increased to 13.5 percent from 12.5 percent the week prior. The VA share of total applications increased to 15.2 percent from 13.7 percent the week prior. The USDA share of total applications remained unchanged at 0.4 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 6.87 percent from 7.00 percent, with points decreasing to 0.57 from 0.60 (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 $766,550) decreased to 7.07 percent from 7.13 percent, with points increasing to 0.57 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 30-year fixed-rate mortgages backed by the FHA decreased to 6.75 percent from 6.87 percent, with points decreasing to 0.81 from 0.92 (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 6.49 percent from 6.63 percent, with points decreasing to 0.50 from 0.61 (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 increased to 6.33 percent from 6.22 percent, with points decreasing to 0.58 from 0.60 (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.

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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

Are Appraisers Professionals?

Valuing Appraiser Professionalism: A Blueprint for Survival

By Jo Traut, McKissock Learning

Excerpts: Having spent nearly three decades in the field of real estate appraisal, I’ve witnessed firsthand the evolution of our profession, particularly with respect to technological advancements. However, alongside these positive changes, I’ve also observed a troubling trend toward increased unprofessionalism. This phenomenon isn’t unique to our discipline. It’s permeated other careers, from medical professionals to teachers to business managers.

What professionalism means in the appraisal profession and how we can all work toward achieving it.

Integrity

Remain steadfast in your commitments, stay true to your word, and uphold your principles, even if this requires declining an appraisal assignment or future work with a client or their agent. By staying honest and true to your values, others are more likely to trust and collaborate with you or recommend you and your business.

Expertise

Professionals strive for proficiency in their field, continually enhancing their knowledge through education, webinars and personal development efforts. It’s not just about acquiring designations but staying informed about market dynamics, industry changes and emerging trends.

Commitment to Excellence

True professionals are prepared, which entails advance planning, dedicating sufficient time and giving proper attention to tasks. Before delivering work to clients, conduct a thorough review to mitigate potential errors. Acknowledge and address any skill gaps or lack of competency promptly and transparently, ensuring a commitment to excellence in every endeavor.

To read more, Click Here

My comments: I have always done “Remain steadfast in your commitments, stay true to your word, and uphold your principles.” I was first trained as a scientist, starting with my high school biology class. After graduation, I worked in labs for 7 years.

I have always been a professional appraiser since I started in 1975, trained at an assessor’s office to do what is in this article. I hate the word “industry” when applied to appraisers. I try to avoid using the word “industry”. Since licensing, residential appraising has become more of a “trade” than a professional career. I quit residential lender appraising in 2005. I know about the conflicts, which have been getting worse.

Appraisal Business Tips 

Humor for Appraisers

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

NOTE: Please scroll down to read the other topics in this long blog post on Easement Liability, college degree requirement AQB, Fannie June Update, ADUs, unusual homes, mortgage origination stats, etc

Read more!!

Appraising Factory-Built Houses

Factory-Built Houses: Types, Benefits, and Tips for Appraisers

By Dan Bradley

Excerpts: Factory-built houses are an important, yet often overlooked, part of the American housing market. Approximately 10% to 12% of new housing starts in the United States are factory-built. There are several advantages to building a house in a factory. For example, certain houses can be constructed for 50% less than a similar-sized site-built home, making quality housing more affordable for thousands of Americans. As an appraiser, your knowledge of factory-built housing is key to a credible appraisal.

This article examines several different types of factory-built houses, their five main advantages, and tips for appraising them.

Factory-built house is a term that refers generally to a number of house types that are constructed or fabricated, at least in part, off site. The prefabricated components are transported to the site and finished or reassembled there. By contrast, site-built, or “stick-built,” homes are put together at the building site from thousands of individual pieces (e.g., studs, nails, sheets of drywall, shingles, wires, pipes, electrical outlet boxes).

For appraisers, understanding the specific type of factory-built house you’re dealing with is key. It tells you which building codes apply, gives you clues about the construction process, and impacts how you approach the valuation.

Factory-built homes include:

  •   Mobile homes
  •   Manufactured homes
  •   Modular homes
  •   Panelized homes
  •   Pre-cut or kit homes

To read more, Click Here

My comments: This is worth reading, especially if you appraise these types of homes. It provides very good, understandable explanations, including identifying the types. For example, GSEs will not purchase or securitize a mortgage on a mobile home manufactured before June 15, 1976. Likewise, HUD will not issue FHA mortgage insurance on a pre-1976 mobile home.

I work in an urban/suburban area, mostly built up, and have appraised very few of these homes. However, they are definitely more affordable housing, which is a very hot topic now.

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I Can’t Believe I Just Bought a $5M Mobile Home’: A Look Inside 5 of America’s Most Lavish Trailer Parks

Just for Fun!

Excerpts: Multimillion-dollar price tags usually come attached to massive mansions or luxury condos—but now, it’s becoming more common to find them in mobile home parks in enviable locations.

But these aren’t just any trailer parks, as they’re more commonly known. For one, they usually sit on prime real estate. And the neighbors? They’re traditionally billionaires or A-list celebrities.

Prices in some of these parks can generally range from $1.5 million to more than $6 million, but that hasn’t put off buyers with that type of cash to spare.

Arguably, the most famous trailer park in America is Paradise Cove in Malibu. Here, celebrities “slum it” in mobile homes to be close to some of the most expensive real estate in the world.

In 2019, fashion maven Betsey Johnson sold her small pink house here for $1.9 million; in 2018, former “Baywatch” babe Pamela Anderson unloaded her trailer for $1.75 million; and in 2016, songbird Stevie Nicks sold hers for $5.3 million.

To read more and see the photos, Click Here

My comment: I had to include this fun article related to the article above

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Appraisers Riding the Waves of Up and Down Mortgage Rates

Appraisal Business Tips 

Humor for Appraisers

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

NOTE: Please scroll down to read the other topics in this long blog post seller concessions, all cash sales, liability, new fee survey, unusual homes, mortgage origination stats, etc

Read more!!

Low Appraisal Fees in 2024

CFPB Crackdown: Unfair Practices Hurting Consumers

This includes Appraisal payments to appraisers by AMCs

by Josh Tucker, June 5, 2024

Comments must be received on or before August 2, 2024

Excerpts: As we all know many AMCs are not paying Customary & Reasonable fee as required by TILA. They have consistently pushed down the pay of Appraisers while making undisclosed profit off consumers and prioritizing cheapest and fastest over quality and competency. The CFPB has been in communication with individuals behind the scenes and are concerned with what has been shown enough to include AMCs in their data collection process.

Now is the time to send them everything we have. To drive legitimate change, we must encourage as many appraisers as possible to submit all relevant information to the contact details provided below.

CONSUMER FINANCIAL PROTECTION BUREAU

[Docket No. CFPB-2024-0021] NOTE: USE THIS LINK TO READ THE DOCUMENT AND THIS NAME TO USE THE COMMENTS PORTAL BELOW.

Request for Information Regarding Fees Imposed in Residential Mortgage Transactions AGENCY: Consumer Financial Protection Bureau.

ADDRESSES: You may submit comments identified by Docket No. CFPB-2024-0021, by any of the following methods:

Federal eRulemaking Portal: http://www.regulations.gov . Follow the instructions for submitting comments. NOTE: THE SEARCH WAS NOT WORKING ON JUNE 6. MAY WORK LATER. CAN USE EMAIL.

Email: 2024-RFI-ResidentialMortgageFees@CFPB.gov. Include Docket No. CFPB-2024-0021 in the subject line of the message.

Mail / Hand Delivery / Courier: Comment Intake —Residential Mortgage Fees Assessment, Consumer Financial Protection Bureau, 1700 G Street NW, Washington, DC 20552.

To read more, Click Here

My comments: DO SOMETHING. YOUR VOICE MATTERS. Let CFPB know about the amount of AMC fees for appraisers, plus other problems. In my opinion, AMCs are ruining residential lender appraising. I have never worked for an AMC, but I’ve been appraising for almost 50 years and understand the problems.

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Appraisal Fees & Value: Lessons from Picasso & Steinmetz

By “Apex Appraiser” June 3, 2024

The Appraisal Institute has been a source of frustration and criticism within the appraisal profession for quite some time. I must admit that I have also expressed my dissatisfaction with them. Nevertheless, I must acknowledge that the new CEO, Cindy Chance, appears to be a positive change and is making some valuable points about our profession from her new position. In particular, she recently discussed appraisal fees in a piece she wrote.

In this excerpt, she shares two stories that provide valuable insights. These stories, one involving art and the other science, highlight the fact that appraising is a combination of both.

First is the story about a young woman who encountered Pablo Picasso one spring day, in a park, sketching. She begged him to sketch her. He graciously agreed, and following a few moments of study and drawing, handed her a sketch of herself. When she asked what she owed him, Picasso answered “$5,000 madam.” “But it only took you five minutes.” “No, madam, it took me my whole life.”

To read more, plus many appraiser comments, Click Here

My comments: Worth reading, plus the appraisers comments. I have been following CEO Cyndi Chance since she started working for AI. It’s definitely a “breath of fresh air” for the AI!

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Appraisers Riding the Waves of Up and Down Mortgage Rates

Appraisal Business Tips 

Humor for Appraisers

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

NOTE: Please scroll down to read the other topics in this long blog post on state appraisal boards, liability, appraiser insurance, price per sq.ft. up 50%, sea level rise, unusual homes, mortgage origination stats, etc

Read more!!

Paperless Appraisal Office?

10 Steps to a Paperless Office

By Mike Fletcher

Excerpts: If you’ve talked to appraisers who have gone digital, you know they love not having boxes of old reports and workfiles cluttering their offices, homes, and garages and not spending money on paper, toner, and other equipment. Even better, appraisers who run a paperless office often enjoy increased productivity and efficiency.

If you’re ready to enjoy the benefits of getting rid of paper, I’m sharing 10 steps to switch to a completely paperless office. While you may need to tailor this blueprint to your preferred methods and workflows, this will help you get started.

Summary

Switching to digital files and a paperless office saves you time and offers better protection for your files. Making the shift to get rid of printed documents and handwritten notes isn’t easy at first, but by going one step at a time and relying on your appraisal software’s tools, you’ll be paperless in no time.

Topics with detailed and practical advice:

1. Why do you want a paperless office?

2. Commit to change – Be aware of wanting to stay in the familiar

3. Identify your paper and how to go paperless

4. Obtain needed equipment for your paperless office

5. Determine your storage needs in a paperless office

6. Establish a new workflow in your paperless office

7. Going paperless starts small

8. Add another paperless item

9. Get trained

10. Seek out your peers

To read more, Click Here

My comments: What appraiser does not want to go paperless? No one. Read this article with lots of good advice!

Business is slow for many appraisers. Going paperless is an excellent option to consider.

This is by far the best article I have read on going paperless. It is written for appraisers, is understandable, and is not too long. The author is a veteran residential appraiser and self-proclaimed “Data Nerd.” He is currently a Senior Data Steward at Corelogic.

I have a home garage and business office full of appraisal files, plus my business records for taxes. I keep hoping someone will come in and steal all the paper and the filing cabinets

Appraisal Business Tips 

Humor for Appraisers

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

NOTE: Please scroll down to read the other topics in this long blog post on HUD bias Complaints, E&O insurance, home fire insurance, unusual homes, mortgage origination stats, etc

Read more!!

Common USPAP Appraiser Violations

8 Common Violations Made by Appraisers

By Dan Bradley

When it comes to appraisal non-compliance with USPAP, certain violations are, unfortunately, somewhat common… I have compiled this list based on many years of personal experience as a reviewer and a state regulator, as well as feedback I have received from other states’ enforcement agencies. Once you’re aware of these common missteps, you should be able to avoid them more easily.

Excerpts:

1. Use of inappropriate sales

One of the most serious issues is the use of inappropriate sales in a sales comparison approach. Sometimes the sales used by the appraiser are dissimilar in physical characteristics, e.g., they are all larger, better quality, or in better condition than the subject, and are not properly adjusted.

In some cases, the appraiser goes some distance away to find sales, but other sales are available in close proximity to the subject. An appraiser should always explain the search parameters and why the comparable sales were chosen. Generic, boilerplate statements such as, “The best and most similar sales were selected and utilized,” should not be used.

3. Failure to analyze sales history

Most appraisers include information about prior sales and transfers of the subject property in their reports. Omitting this information is never a good idea; after all, it is easy for an underwriter or reviewer to check this information right from their desk. However, merely disclosing the date and sale price of a prior sale or transfer is not sufficient to meet USPAP requirements. The appraiser must also analyze the prior sale or transfer and provide a summary of their analysis in the report.

7. Mischaracterization of the subject property

Another (unfortunately) common violation is mischaracterization or misrepresentation of the subject property. During my term as an appraisal board member in my state, I encountered several cases in which a mixed-use property or commercial property was appraised as a residential property so a borrower could obtain a residential mortgage.

To read more, including all the violations, Click Here

My comments: The blog post is well written, relatively short, and worth reading, if only for reminders. In last week’s newsletter, Dan Bradley’s first name was misspelled as Dave, his brother. My apologies. I don’t like anyone misspelling my first name as Anne, not Ann, my correct name!

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FHA appraisal problems

Appraisal Business Tips 

Humor for Appraisers

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

NOTE: Please scroll down to read the other topics in this long blog post on GSEs outsourcing AI for appraisal photos and Privacy issues,  ROVs, mortgage rate forecast, current real estate market, unusual homes, mortgage origination stats, etc.

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$25M California Estate With a Private Mountain in Somis, CA

Excerpts: 8 bedrooms, 11.5+ baths, 19,660 sq.ft., 22 acre lot, built in 2008

Known as El Palacio Del Solano, the 22-acre property in Somis, CA, boasts a main residence, two-bedroom guesthouse, and an event space designed for grand-scale entertaining. The “ultra-private compound” in the hills of Southern California drew the most clicks on Realtor.com® this week.

Built in 2008, the luxury estate last traded hands in 2021 for $6,250,000. Dubbed “the holy grail of Somis,” the mansion’s lavish amenities include a home theater, massage room, wine cellar, sports court, an arcade room, a lazy-river pool, and a motor court for up to 20 vehicles.

The Spanish-style residence was designed for large-scale entertaining with a wine-tasting room, grand formal dining room, and an outdoor kitchen with multiple seating and entertainment areas. This home’s private massage room, primary suite with sauna, and lazy-river pool were all designed for relaxing.

A spacious four-car garage is attached to the facility equipped with volume ceilings ideal for parking event vans, trucks, and small to mid-size buses. An estimated range of fifteen to twenty cars could comfortably be parked in the driveway and motor court spaces.

To see the listing with 40 photos, Click Here

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Fannie, Freddie’s Offshore Gambit Imperils Privacy of Millions

By Jeremy Bagott, May 20, 2024

Excerpts: Mortgage giants Fannie Mae and Freddie Mac are reportedly “bench-testing” an arrangement with a foreign AI firm in which the offshore firm will data-mine millions of images showing the personal spaces of U.S. homeowners and tenants.

If your home was appraised for a refinance or new mortgage in recent years, the lender likely sent a “property data collector” to take photos of your kitchen, living room, and each of your bedrooms and bathrooms. (Pressured by the Biden administration, government-backed enterprises Freddie Mac and Fannie Mae are instructing lenders they no longer need to use state-licensed appraisers for the task.) The images of your home’s interior spaces, along with identifying information, were then likely uploaded to a server run by a vendor.

Now, according to a source, Fannie Mae and Freddie Mac have potentially caused millions of these images to be made available to an artificial-intelligence company headquartered in Barcelona, Spain, known as Restb.ai. The images are then harvested for information with the help of artificial intelligence.

To read the post plus appraiser comments, Click Here

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Comments from Denis Desaix, SRA, MAI

Editor’s Note: Originally posted on the National Appraisers Forum Google group, which I read regularly.

I think Bagott’s issue is a legitimate concern. I wouldn’t want the interior photos of my home being catalogued by some third-party vendor that were taken related to a mortgage finance transaction I was engaging in. Ditto the floor plan. The data won’t be limited to what is gathered by property inspectors; however, appraisers’ data will also be in that mix.

The fix sounds relatively simple: Require Fannie/Freddie (or any regulated lender, if you will) to process the image-data in-house and maintain it under their control. The counterargument is that if we are going that route, then let’s classify the image data as personal financial information and cover it under the same rules that other consumer financial information is covered by.

However, it seems to me that Bagott’s editorial strongly implies that the imagery data will be identified with a specific consumer/consumer address. I’m not sure that is the case nor would it be necessary to do the analysis Fannie describes.

Here is how Fannie describes the process (from the link Bagott provides):Let’s walk through a process that uses this technology to validate the quality/condition ratings of the subject’s interior compared to the comps and (if applicable) previous photos of the subject.

1. A File# or other tracking number can identify the subject. The address need not be identified.

2. The identity of the comp’s address is less problematic, assuming the photos used are those available for public use. If the photos come from Fannie’s comp database, they, too, can be assigned a tracking number.

3. The vendor works its magic (I would encourage anyone interested at this stage to visit the one identified vendor webpage (https://restb.ai/) and especially click the link to “Appraisals and Inspections” to see how the product can be used for the stated purpose). And, by the way, at least one prominent appraisal forms provider is listed as a customer of this vendor; there are other names that many will recognize as well.

4. The results come back: the subject’s identity isn’t disclosed and remains unknown.

5. Finally, the vendor’s use of the photos is limited by contract, with stiff penalties for violation. If that doesn’t satisfy legitimate security and personal information requirements, the system can be licensed to Fannie/Freddie, and they can run it in-house.

Since we don’t know what protections against potential abuse (if any) are being put into place, there is legitimacy in asking about that and having a concern. In this case, I happen to have those questions and share that concern. Kudos to Bagott for raising them publicly.

I do take issue with Bagott on a number of his opinion pieces (not all, but enough to say “many”). But that’s OK. His pieces are not what I would call news articles. They are editorials (as they present his view on a certain item) or press releases (announcing something for purposes of an advocacy agenda and not necessarily for information purposes so one can fairly evaluate the issue’s pros and cons).

Many of my posts on this forum could be called editorials, although I try to present a balanced picture. Then, I’ll advocate my position and give the reasons why. We’re all free to express our opinions (we do so here within the limits of the forum rules and usually with professional decorum) as we see fit. That’s healthy.

But if our posts appear one-sided or present what appears to be an incomplete description, that typically generates more questions. Those questions, left unanswered, chip away at the strength of the post’s point. So, should it be with Bagott’s editorials; in this case, he raises a valid point, but it seems to me that there is a practical way to eliminate the concerns he raises. Acknowledging that possibility adds additional strength to the argument that this process must be more transparent so we are satisfied it isn’t being abused.

But that’s my editorial opinion; each of us is free to have our own, and all of us are free to debate the other’s opinions.

My comments on Denis’ post: I have known Denis for a long time. He is very savvy and reviews residential appraisal reports for several lenders. He sees a lot of appraisal photos.

My comments: Bagott’s emails are sometimes a bit “over the top” for me, but this one is worth reading. To subscribe to Bagott’s emails, Click Here

When I appraise a house that needs work, the photos always seem to look better than reality. I always comment on this in my appraisal report.

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ROV, Part 2

By George Dell, SRA, MAI, ASA, CRE

Excerpts: ROV (Reconsideration of Value) is now in the boat. Is it safe?

We suspect this will be a long row to get to the chosen island. Just row!

It may be good to start where any good study starts. “What are the words?” The only two words here are “reconsider” and “value.” Let’s look at these. (Sometimes just looking at the words can sort things out.) Different words mean different things to different people!

Reconsider: “To consider again, especially for a possible change of decision” … “especially with a view to changing or reversing.”

Value: “The worth or usefulness something.”

The new Fannie Mae Selling Guide section discusses the process to changes to the appraiser opinion of value. One more word might be important here: “Appraisal.” Appraisal is defined as the act or process of developing an opinion of value, or the opinion of value itself. An opinion.

Ah. This simplifies things. An official ROV wants you to change your opinion. Usually, if not always, this means “You came in too low.” But you already knew that …

The official ROV process includes a procedure for when the value:

is unsupported;

is deficient (due to unacceptable appraisal practices); or

reflects prohibited discriminatory practices.

Whew! A lot to think about here.

To read the full post, Click Here

My comments: If you work for lenders, read this. Very well-written, short, and understandable.

The May 10 issue of this newsletter had a long section on ROVs. To read the issue, including George Dell’s ROV Part 1, Click Here

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Fannie Mae May Mortgage Rate Forecast

Excerpts: Longer-term interest rates, including mortgage rates, have been volatile the past two months – first rising in response to stronger than expected economic data, and then a more recent decline on weaker readings. Despite this, we view economic growth and inflation as being on the same track as our prior outlook, and we continue to anticipate moderation as the year progresses.

We also continue to expect the Federal Reserve to implement the first of two rate cuts this year in September as inflation measures moderate, gradually trending toward the Fed’s 2-percent target. However, we believe the Fed is likely to remain cautious as there are still signs that inflation may remain stickier than anticipated.

Consistent with the slower sales outlook, our forecast for total mortgage originations was downgraded modestly to $1.73 trillion for 2024 ($1.81 trillion previously) and $2.08 trillion in 2025 ($2.26 trillion previously).

To read about more Fannie economic forecasts and see the graphs, Click Here

My comment: Reading Fannie’s forecasts are helpful. They have been doing them for a long time and have expert economists and other analysts.

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$2M Home Built From 11 Shipping Containers in Vancouver, WA

Excerpts: 4 bedroom, 3.5 baths, 4,074 sq.ft., 0.4 acre lot, built in 2015

A man with a one-of-a-kind idea created a beautiful residence near the border between the states of Washington and Oregon.

The house on S.E. 164th Avenue in Vancouver, WA, is built from 11 shipping containers of different colors.

“The owner actually built it himself, and he did not miss a beat when he built this,” explains the listing agent, Louise James.

She notes that the owner, who works in the import and export business, decided to build a container house.

“His friends all laughed at him,” she adds, “and said, ‘Oh, you can’t do that.’ So he drew it out on a piece of paper and said, ‘This is how I want it to be’—and it turns out to be this amazing masterpiece.”

Construction began on the 4,074-square-foot house in 2015, and finished two years later. HGTV featured the residence during its construction, on the first season of “Container Homes.”

James tells us she’s never seen anything like this home, with influences from all over the world.

Bridging the gap between East and West, the house features an array of Asian influences.

“It has a Japanese garden outside, and it has Tibetan prayer wheels on the entry,” James says, noting that the Japanese tearoom doubles as a meditation room. In a courtyard, a koi pond is outfitted with aquarium glass, which makes it possible to see the fish from inside the house, in the sunken conversation pit.

To read more and watch the video on the top of the page, Click Here

Note: video may be slow to load, but worth the wait!

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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. Many appraisers are not busy. Some are busy, usually with non-lender appraisals.

Mortgage applications increased 1.9 percent from one week earlier

WASHINGTON, D.C. (May 22, 2024) — Mortgage applications increased 1.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 17, 2024.

The Market Composite Index, a measure of mortgage loan application volume, increased 1.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 1.1 percent compared with the previous week. The Refinance Index increased 7 percent from the previous week and was 21 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 11 percent lower than the same week one year ago.

“The 30-year fixed mortgage rate declined for the third straight week, dropping to 7.01 percent – the lowest level in seven weeks,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Rates coming down from recent highs spurred some borrowers to act, with increases across both conventional and government refinance applications. VA refinances had a double-digit increase for the third consecutive week, although the current level of refinancing is still well below its historical average. Purchase activity continues to lag despite this recent decline in rates, down 11 percent from a year ago, as potential buyers still face limited for-sale inventory and high list prices.”

The refinance share of mortgage activity increased to 34.0 percent of total applications from 32.0 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.6 percent of total applications.

The FHA share of total applications increased to 12.8 percent from 12.4 percent the week prior. The VA share of total applications increased to 13.7 percent from 12.7 percent the week prior. The USDA share of total applications decreased to 0.3 percent from 0.4 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 7.01 percent from 7.08 percent, with points decreasing to 0.60 from 0.63 (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 $766,550) decreased to 7.18 percent from 7.22 percent, with points decreasing to 0.44 from 0.58 (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 6.77 percent from 6.86 percent, with points decreasing to 0.88 from 0.94 (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 6.42 percent from 6.61 percent, with points decreasing to 0.54 from 0.65 (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 6.48 percent from 6.56 percent, with points decreasing to 0.55 from 0.66 (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.

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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

Appliances for FHA appraisals

How does the FHA define appliances?

By Daniel A. Bradley, SRA, CDEI

In September of 2015, FHA revised Handbook 4000.1 to provide a specific definition, which includes:

Refrigerators

Ranges/ovens

Dishwashers

Garbage disposals

Microwaves

Washers and dryers

It’s important to note this does not include garage door openers, swimming pool pumps, intercoms, sound systems, and security systems.

How do appraisers consider appliances?

FHA Handbook 4000.1 also clarifies when appliances are required to be operational by stating, “Appliances that are to remain and that contribute to the market value opinion must be operational,” and, “The Appraiser must note all appliances that remain and contribute to the Market Value.”

FHA requirements for appliances: Is a house required to have a stove?

To read more, Click Here

My comments: Worth reading if you do FHA appraisals. Short and understandable. I did FHA appraisals for a few years in the mid-80s. Too many requirements so I quit doing them, but they helped me get started in my appraisal business.

 

Appraisers Riding the Waves of Up and Down Mortgage Rates

Appraisal Business Tips 

Humor for Appraisers

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

NOTE: Please scroll down to read the other topics in this long blog post on E&O and state boards, bias, 32% sales are new homes, unusual homes, mortgage origination stats, etc.

Read more!!

Appraisers Riding the Waves of Up and Down Mortgage Rates 

The Surfing Appraiser

Riding the Waves of Up and Down Mortgage Rates 

By Mark Buhler

Excerpts: Riding the waves of the appraisal profession can result in a range of outcomes and emotions over time. Appraisers, and surfers, have varying levels of experience, and experiences. Most appraisers have been through some extremely busy seasons that have been very positive. Those same appraisers have gone through droughts, where appraisal orders dried up.

Appraisers have been blessed to have the independence and autonomy to create whatever they want for themselves. Most workers in America do not have the same opportunities for success and advancement that appraisers have. Look at this lull as a time of opportunity. A time to finally work on and execute a plan for your business.

During the refinance boom of the early 2020’s, the majority of appraisers did not have time to come up for air. The waves of work kept them down, and every time they got a chance-they grabbed the next order (or wave) and maximized the opportunity while it was there. Appraisers were busy cranking out appraisal reports. Now appraisers are not busy, but they should be. Do not get out of the water and put your surfboard away. Stay out there, splash around in the calm ocean, there are waves coming.

To read more, Click Here

My comments: Read the full article! This article uses surfing as an excellent illustration. In my 20s, I lived in my van for a few years and parked it near my surfer friends’ house in Santa Cruz, CA. They surfed every morning when the waves were good (Steamer Lane), cold or raining. When the waves were low, they stayed home or went over to see if there were any changes. I watched and listened to them talk about it and learned a lot. A very good analogy to appraising.

Appraisal Business Tips 

Humor for Appraisers

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

NOTE: Please scroll down to read the other topics in this long blog post on , , VA changes, State Appraisal Board problems, gratitude for appraisers, unusual homes, mortgage origination stats, etc.

Read more!!

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.

 

Appraisal Business Tips 

Humor for Appraisers

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

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.

Read more!!

ChatGPT for Appraisers

ChatGPT: Valuable Tool or a Replacement for Real Estate Appraisers?

by Dustin Harris, The Appraiser Coach

Excerpts: ChatGPT: A Game-Changer for Appraisal Work

For those who have embraced it, ChatGPT has been transforming multiple aspects of appraisal work, such as:

Appraisal Work:

  • Writing narrative
  • Market analysis
  • Market-specific information
  • Descriptions of adjustments
  • Terminology
  • ResearchMarketing:
  • Creating lists
  •  Writing emails and messages to current and potential clients
  • Crafting blogs
  • Strategizing networking and relationship development
  • Writing presentations for ‘lunch and learn’ events with real estate agents
  • Crafting the perfect apology letter when you upset a key loan officer in your small town
  • To read lots more, click here
  • My comments: Many thanks to Dustin for writing this article! I have not had time to use it, but have been reading and watching demos about how it can be used for appraisers for awhile. It definitely can be very useful, as Dustin explains. It can be tricky at first to use, but Dustin explains it.

I recently had to renew my California Driver’s license, as I am over 70 and had to do a written exam and eye test. I had difficulty setting up an appointment and clicked on “Chatbot”. It was much friendlier than any other Chat support I have used. I recognized the use of software similar to ChatGPT.

Appraisal Business Tips 

Humor for Appraisers

Fannie: Words and Phrases in Appraisals

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

NOTE: Please scroll down to read the other topics in this long blog post on non lender appraisals, liability, markets with few sales, Bias, unusual homes, mortgage origination

Read more!!