Posts Tagged non-lender appraisals

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OK to average adjusted comps on appraisals?

By Ann O'Rourke on December 8, 2023 / lender appraisals, non-lender appraisals, real estate market / Leave a comment

Tags: lenders, non-lender appraisals, real estate market

OK to average adjusted comps on appraisal?
To Mean, or Not to Mean, That is the Question

By Brent Bowen

Excerpts: There seems to be a consensus among appraisal reviewers that the appraiser should not average the adjusted sales prices of their comparables in order to arrive at an indicated value of the subject from the Sales Comparison Approach. Fannie Mae is referenced as the source of this prohibition, although no such prohibition explicitly exists according to Fannie Mae’s Selling Guide.

There is a prohibition on averaging techniques, but that applies in the Reconciliation section with regards to reconciling the three approaches to value. In other words, Fannie Mae does not want you averaging the indicated values from the Sales Comparison Approach, Cost Approach, and Income Approach in order to arrive at an opinion of value. The discussion of the reconciliation of the indicated value of each comparable sale contains no such prohibition.

The conventional wisdom is that the most similar comparable be given the most weight. But that begs a question… similar how? We can fairly easily observe the comparable which is the most physically similar, but what about the one that is the most transactionally similar? In other words, which comparable deviates the least from the mean?

To read more, Click Here

My comments: Excellent analysis. One of the best I have read. Basic Appraisal, but not all appraisers know about this, especially if they “appraise to fit the form” aka form fillers. Worth reading, plus the appraiser comments.

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Why Comp Photos in Appraisals?

Appraisals: Using Comps Across a Freeway?

By Ann O'Rourke on December 1, 2023 / adjustments, appraisal business, non-lender appraisals, waivers / Leave a comment

Tags: adjustments, appraisal business, appraisal how to, non-lender appraisals, waivers

Pulling comps from the other side of the freeway

By Ryan Lundquist

Excerpts: It can be a REALLY bad idea to pull comps from the other side of the freeway, but not always. Today I have some thoughts about location, comp selection, and lenders freaking out when schools are mentioned in appraisal reports.

I don’t normally pull comps across a highway

In so many cases it’s an awful idea to cross a major road or highway to pull comps because a highway sometimes separates markets that are far different in age, square footage, lot size, architecture, price point, school district, etc….

But, crossing the highway does work here

With that said, I want to show you an example of a local neighborhood where I have zero hesitation about pulling comps from both sides of the highway. The areas north and south of Highway 50 below represent the College-Glen area…

Why it’s no biggie to pull comps like this

A) Prices are similar: Prices are similar on each side of the highway. I’ve found this when pulling comps through the years, and I’ve also shown this when making graphs. I will say the north side tends to have a slightly larger square footage than the south side (same with west vs east), which is something to consider when we compare stats. But it’s still not a major difference.

B) Buyer Behavior …

C) School System …

To read lots more, plus maps and many appraiser comments, Click Here

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2024 USPAP For Appraisers

By Ann O'Rourke on October 6, 2023 / adjustments, appraisal how to, Economic analysis, Fannie, hybrid appraisals, non-lender appraisals, real estate market, USPAP / Leave a comment

Tags: adjustments, appraisal business, appraisal how to, Fannie, non-lender appraisals, USPAP

2024 USPAP

Source: Appraisal Foundation

The 2024 Uniform Standards of Professional Appraisal Practice is now available for purchase in physical and digital formats.

This year, for the first time, you can purchase just the book of USPAP standards for $35. This covers all Definitions, Rules, and Standards.

We also have a new product launching this year. All Advisory Opinions, Frequently Asked Questions and the recently launched Reference Manual will now be part of a standalone publication called the 2024 USPAP Guidance and Reference Manual.

This change reflects the maturation of USPAP, resulting in longer effective dates. The ASB will continue to review USPAP for changes when necessary but will shift much of its focus to providing more guidance to the marketplace. Appraisers can now buy one set of USPAP standards and keep that publication on their bookshelf for as long as that edition is effective and purchase just the Guidance and Reference Manual as needed for coursework and updates.

If you like having the USPAP standards and guidance material linked, we still have you covered. You can also purchase a linked digital version of the eUSPAP and Guidance and Reference Manual and get seamless access across both documents.

To read the full letter, click here

My comments: USPAP 2024 is effective January 1, 2024. I’ve been waiting for a very long time for longer than 2 years between effective dates. Also, there is no ending date for the 2024 version.

When USPAP started, it was very exciting as appraisers had to decide what needed to be changed or added. Lots of people wanted to be on the ASB. Over time, I quit following the updates as there were few significant changes.

2024-2025 USPAP 7-Hour Update Course is being approved or is approved, in the states. I assume a new class will be required every two years in the future. Gotta keep that money coming into the Appraisal Foundation, I guess…

I really hated the classes when there was not much to say except a rehash of the past. I taught USPAP before the ASB told you what to teach. It was my favorite class as we could focus on issues in our current market. Of course, now there is appraiser discrimination, the current hot topic. Personally, I think there is very, very little intentional discrimination by appraisers, compared with the intentional discrimination by lenders (and others). “Red Lining” still exists, some are in the same locations.

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SFR with ADU or Two Units?

By Ann O'Rourke on September 29, 2023 / ADUs, climate change, future, non-lender appraisals, real estate market, retirement, va / Leave a comment

Tags: adjustments, ADUs, mortgage loan volume, non-lender appraisals, real estate market, va

How to Identify a Single-Family with ADU vs. Two-Family Property

By McKissock

Excerpts:

The presence of an additional living unit can complicate the appraisal process. It may make it difficult for you, the appraiser, to know how to classify the subject property. How do you know whether you’re dealing with an accessory dwelling unit (ADU) or a second unit?

Topics include:

ADU meaning and types
What is a two-family property?
How to tell if it’s a single-family with ADU vs. two-family property
It’s more likely to be a two-family property vs. single-family with ADU if:
It’s more likely to be a single-family with ADU vs. two-family property if:

To read more, click here

My comments: ADUs have been a controversial topic for a long time in California as state and local governments kept changing their ADU requirements. Finally, what they are and where they can be built became standardized. Today, they are becoming popular to get extra rentals in markets low on housing. Most recently, there is a possible regulation to sell them separately from the main house. Another tricky HBU issue in California!

Check the regulations in your state, county, or city.

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NAR Appraisal Survey 2022

NAR Appraiser Survey July, 2023

By Ann O'Rourke on September 15, 2023 / adjustments, ADUs, AMCs, appraisal how to, Fannie, non-lender appraisals / Leave a comment

Tags: adjustments, ADUs, AMC, appraisal how to, Fannie, non-lender appraisals

NAR Appraiser Survey July, 2023

In July 2023, NAR Research conducted a survey of all 9,800 appraiser members and 50,000 randomly-selected residential-focused non-appraiser members.

The survey results had a comparison of 2022 and 2023, which was very interesting.

Appraiser Topics
Greatest challenges in business
Lesser challenges with business
Valuations
Comfort with valuation tools
Radius in which appraisals are conducted
Radius by area type (rural, small town, urban, resort, suburban)
How often asked to conduct appraisals outside geographic area/Property type of expertise

Sample: Greatest challenges in business

(AMCs) in general among their greatest challenges. This year, this option was broken into three separate AMC-related issues. Forty-four percent cite at least one of these, with 28 percent specifically citing AMC requests for revisions.

This year, however, the single greatest challenge, cited by almost half (47 percent), is “fee pressures,” which, based on comments, is also related in many cases to pressure from AMCs. This is up sharply from 27 percent last year.

One-quarter (26 percent) cite technology fees (not an option in 2022). Appraisers are less likely this year to cite expanding regulations/interpretations of regulations, lender requirements, pressure from real estate agents/brokers, and liability concerns.

The 21 percent who cite other challenges are most likely to cite lack of business/slow market, rising interest rates, low fees, and to reiterate pressure from AMCs.

A very good graphic is included for each section.

To read the report, click here

My comments: Read the appraiser sections in the long report. Fortunately, appraiser results are in the first section. I read the full survey. Most of the questions were for all NAR members, both appraisers and non-appraiser members. Some may be of interest to you. Much of the appraiser results were what we already sort of suspected, but it is good to see actual survey results.

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Appraiser Salaries

By Ann O'Rourke on August 25, 2023 / appraisal business, humor, non-lender appraisals / Leave a comment

Tags: appraisal business, humor, non-lender appraisals

What’s the Average Real Estate Appraiser Salary?

Excerpts: On average, appraisers earn $102,620 a year. However… the average appraiser salary varies significantly across license levels.

Trainee appraisers earn an average annual income of about $53K. Licensed appraisers earn approximately $89K per year. Certified residential appraisers earn more than $101K annually. And certified general appraisers earn the most, making approximately $145K per year.

Like with many professions, the more time you put in, the more your hard work pays off. Average earnings tend to increase the longer an appraiser is in the profession, with the greatest jump being from 0-2 years of experience to 2-5 years of experience. Appraisers who have put in 16+ years in the appraisal industry tend to make the most ($118K), while those who have less than 2 years of experience earn the least ($43K).

To read more and see the charts, click here

My comments: Mckissock results are from their own survey of appraisers. I have seen this type information before, but mostly from contacting companies, recruiters or government databases. Most res appraisers are fee appraisers, but this lets you know the relative income levels based on various factors.

If you’re thinking about upgrading your license, this illustrates the income levels. For example, I do both commercial and residential appraisals, a significant positive factor in my income. When one is slow, I do more work in the other. Of course, if you are only licensed you should upgrade ASAP.

Relatively few residential appraisers have salaried jobs, but they are available at lenders, AMCs, assessors, etc.

My first appraisal job at a county assessor’s office in 1975 paid $900 per month. I would have never become an appraiser without a salaried job. Also, due to “affirmative action” at that time, women were hired for the first time as appraisers at assessor’s offices and lenders. An appraiser I know was hired by FHA as an appraiser trainee. She was previously a secretary. There were few women at my appraisal classes.

Until the early 1990s, when lenders outsourced appraisals to fee appraisers, most res appraisers had staff lender jobs.

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Apps for Appraisers

By Ann O'Rourke on August 18, 2023 / appraisal business, appraisal forms, data, Fannie Forms, Freddie, non-lender appraisals, real estate market / Leave a comment

Tags: appraisal business, Fannie, Fannie forms, future, non-lender appraisals, real estate market

7 Must-Have Apps for Appraisers

By: McKissock

Excerpts:

1. Dragon Anywhere

Dragon Anywhere is a dictation and speech-to-text app that allows you to create, edit, and share documents from your mobile device. This professional-grade dictation service could save you tons of time on typing reports and taking notes in the field. The company boasts a 99% accuracy rate as well as powerful voice editing capabilities. Dragon is very well-liked among appraisal professionals, making it number one on our list of must-have apps for appraisers.

6. Genius Scan

This app gets a lot of love from appraisers. Genius Scan makes it easy to scan, upload, and share documents using your mobile devices. It can even scan handwriting and convert it into text. This tool is excellent for making copies of tax records, floor plans, etc. Over 200 million users and thousands of small businesses are currently using Genius Scan. This app could be a lifesaver for your workfile creation.

To read about the other 5 apps, click here

My comments: Worth checking out. When business is slow is an excellent time to look for new apps, learn how to use your MLS and forms software, etc. etc. Dragon has been around a long time and is popular with commercial appraisers.

Fannie: Words and Phrases in Appraisals

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Appraiser Countersues Alleged Discrimination

By Ann O'Rourke on July 7, 2023 / Fannie, non-lender appraisals, real estate market, state appraiser regulators / Leave a comment

Tags: Fannie, non-lender appraisals, real estate market, state appraiser regulators

Appraiser Countersues Black Plaintiffs Who Alleged Discrimination

by Isaac Peck, Publisher WorkingRE

There are now a number of lawsuits facing appraisers where the primary allegation is racial discrimination.

Tate-Austin v. Janette Miller, filed in California in Dec. 2021, was one of the first (and perhaps the most publicized). But since late 2021, a number of similar lawsuits have popped up—from North Carolina to Maryland.

Connolly & Mott v. Shane Lanham et al. is one highly publicized lawsuit covered at length by mainstream media–CBS News, The New York Times, NBC, CNN, ABC News, and more.

Filed in August 2022 in the U.S. District Court of Maryland, Connolly and Mott allege that Lanham discriminated against them and violated professional appraisal standards because of his allegedly “racist beliefs” (among other things).

Mr. Lanham is now countersuing Connolly and Mott for labeling him a racist, making false and defamatory accusations, and causing severe harm to his business, his reputation, and his well-being. Alongside his counterclaim, Lanham has also filed a Motion to Dismiss Connolly and Mott’s initial claim, arguing that they have failed to show any facts that support he discriminated against them.

“Plaintiffs cannot transform allegations of incompetence or a breach of appraisal industry standards into racial discrimination by baldly alleging that Mr. Lanham believed that Plaintiffs did not belong in their neighborhood and that their home was worth less than other homes because of their race. There are no facts alleged in the First Amended Complaint, and none can be alleged with good faith, that Mr. Lanham treated Plaintiffs any differently than homeowners of other races,” the motion reads.

To read more, click here

My comments: Long article and worth reading. Discusses many issues and lawsuits. I don’t write about this topic much. My opinion is that everyone is biased against something. I learned I was biased against young Black men when I was on a criminal jury many years ago.

When a young Black man, the defendant, walked into court, I immediately thought he was guilty. I sent a note to the judge who excused me publically in court. I was very, very embarrassed. But it would have been a lot worse to stay on the jury and vote to convict him. My parents raised us not to be prejudiced against anyone. But I grew up in Tulsa, OK, next to Greenwood, an area of successful Black residents prior to 1921. The Tulsa race massacre occurred on May 31, 1921. I never heard it mentioned by anyone. Older people, who knew about it, never spoke of it. Some newspaper issues were destroyed.

I assume that since I had been appraising in high crime neighborhoods, I became prejudiced. I work hard not to show it. I don’t cross the street when I see a young black man coming towards me, and I smile when we pass, but I do get a little nervous. What is most important is recognizing and not acting on your prejudice.

I have been tempted to lower a value when an owner’s large do dog jumps on me or tries to bite me. But I know I don’t like aggressive large dogs and don’t let it affect my value.

Of course, some appraisers could be biased. But, for residential lender appraisers, there is no advantage to coming in “low” on any residential lender appraisal. You may lose a client.

In the past, appraisers were trained by FHA to redline, with lower values in Black neighborhoods. Appraisal textbooks and classes included this. But, it all changed in the mid-1970s, when I started appraising and was no longer allowed. Hopefully, I would not have become an appraiser working for residential lenders before then because of the obvious bias.

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Fannie: Words and Phrases in Appraisals

By Ann O'Rourke on June 16, 2023 / appraisal business, Fannie, non-lender appraisals, ROVs / Leave a comment

Tags: appraisal business, Fannie, non-lender appraisals, ROVs

What Fannie Says Effective June 29, 2023

Say This, Not That: Words and Phrases to Replace in Your Appraisal Reports

By McKissock

As part of our contributor series, Julie Molendorp Floyd gives tips on how to use more objective language in your appraisal reports ahead of the new Loan Collateral Advisor (LCA) alert messages that will take effect June 29, 2023.

Excerpts: Following that thought process, our appraisal language has simply got to change to reflect current times. In addition, our lenders and GSE’s are implementing tools and programs to identify when “Certain prohibited, subjective or potentially biased words or phrases are included in appraisal reports.”

(Freddie Mac Announcement: “Loan Collateral Advisor: Starting June 29 New Messages Alert Users to Certain Unacceptable Appraisal Practices,” April 28, 2023)

To read, click here

So, if we have the technology and tools to present our conclusions in clearer, fact-based ways, let’s get ahead of the program and make the changes proactively.

None of us enjoy completing revision requests. They take time, effort, and ultimately do not contribute to our bottom line. However, revision requests are part of an appraiser’s life. How can you go about crafting your appraisal report to avoid a revision request for “problematic language” or “unsupported conclusions”? Let’s dive into some words or phrases that should not be included in your appraisal reports and uncover ways to convey your meaning in a compliant, credible way.

Topics:

Moving toward fact-based language
Words and phrases to replace in your reports
Samples:
Say This Not That:
Within 10 blocks of shopping areas — Convenient to shopping areas
Conforms to current market trends — Traditional
Primary bedroom, ensuite — Master Bedroom

To read more, click here

My comments: If you do lender appraisals, read this post.

Changes in names is nothing new for appraisers. Since FHA, etc stopped redlining since the 1970s, appraisers have been asked to avoid certain words. Now Fannie’s computers will let lenders know.

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