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Should we raise the deminimus to $2 million? Or $5 million?By George Dell
Excerpt: To simplify this discussion, let’s note two facts: Appraisers can perform ‘evaluations’, normally using the same scope of work as an unlicensed “evaluator”. What’s the difference? It appears to me that there is one key difference. The question is then: Which part of the service is not required? Is it the integrity/ethics, or the performance (such as using the right data and analysis)?
It appears to me that since unlicensed persons can charge less, have less tax/fee burden (for licensing, education, and errors/omissions insurance- the less ethical, less responsible ‘evaluator’ can always outbid the licensed appraiser every time.
Read the full blog post and appraiser comments. What do you think? Add your comments.
My comments: Interesting analysis by George, of course!! Credit unions are proposing to raise the commercial deminimus to $1,000,000. I didn’t know they made commercial loans. Guess they forgot about the commercial crash in the late 1980s.
As long as Fannie and Freddie (and their investors) require res appraisals, it won’t have a big effect on residential. The FIRREA deminimus in 1989 was $200,000. No effect on much of anything, even though we thought the Sky Was Falling.
The usual Mortgage Cycle: Good Business = lower requirements. Bad Business = higher requirements.
Covid-19 Residential Appraisers Tips on Staying Safe For Covid Updates, go to my Covid Science blog at covidscienceblog.com To read more of this long blog post, click Read More Below! |
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Agent’s Source Of Square Footage May Affect Sale Price
Excerpts: If you use county tax assessor information as a square footage source in your listings you may want to rethink this. I recently did a study to see how homes sold based on where the agent got their information from and I have to say what I found was intriguing. Agent square footage and sales prices for appraisers is important.
The Greater Alabama MLS, of which I am a member, provides the source of square footage information that is included in the listing. The four sources include tax records, seller, building plans, and appraiser.
Below the article are links to some other good posts by the author on this topic.
My comment: Very interesting analysis and graphs. My MLS is the same, except “other” is included and tax records is the default. Tax records are iffy in California as Prop 13 passed in 1979 and records have not been updated since then, unless there is new construction. Also, what assessors include in GLA can differ from what the current market does. Some neighborhoods and properties are reasonably accurate and some are way off in my small city.
I have done a lot of relocation appraisals, where 2 or 3 appraisers appraise the same house. If we had the same square footage it was sorta suspicious… Some measure to the half foot, rounding up or down, some use decimals, etc. It is not exact.
I can really see a demand for using appraiser measurements. I will be writing an article in my paid newsletter soon about this topic. There are a few appraisers who do them, including discussing pricing and liability.
Covid-19 Residential Appraisers Tips on Staying Safe
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To read more of this long blog post, click Read More Below!!
To Drive or Not To Drive, That is the Question!!Excerpt: The argument of using MLS photos or shooting your own photos has been debated by appraisers for the last few decades. You, as appraisers, want to be sure the comparables you are using are of the correct house and also look as the MLS illustrates. Most importantly, you want to make sure the house is still standing. The listing agent’s job is to sell the house. As the salesperson they will highlight all the positives and leave the negatives up to the imagination. This is one of the main reasons it is extremely important to not solely rely on MLS when utilizing comparables.
Click here to read the full post, plus over 50 comments from appraisers. Add your own comments!!
My comment: this issue has been going on for decades and is still controversial. Especially in rural areas!! Note: the post is a sorta promo for proxpics, a photo taking service, but the appraiser comments are great. Covid-19 Residential Appraisers Tips on Staying Safe For Covid Updates, go to my Covid Science blog at covidscienceblog.com Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!! To read more of this long blog post, click Read More Below!! |
Sorry, home appraisers, bots are coming for your jobs
NOTE: This post was published in December 2018. This topic has been going on for a very long time since AVMs started in the 1970s.
Federal regulators are looking to change appraisal rules to allow for more automated appraisals
Excerpt: Such a change could prove lucrative for upstart property valuation companies that use algorithms, artificial intelligence and drones to value homes. If these rule changes had been in effect last year, roughly 214,000 additional home sales, or some $68 billion worth, could have traded hands without an appraiser. Bots replacing appraisers?
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Plan to Reduce Human Appraisals May Lead to ‘Wildly Inaccurate’ Estimates
From NAR:
Excerpt: Automated home evaluations likely would take the place of in-person appraisals for qualifying properties-a move appraisers warn could lead to inaccurate estimates and more sellers who are unrealistic about home value.
Covid-19 Residential Appraisers Tips on Staying Safe
For Covid Updates, go to my Covid Science blog at covidscienceblog.com
Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!
To read more of this long blog post, click Read More Below!!
$400,000 Proposed bank threshold for appraisals to be replaced by evaluationsBelow are links to the proposed rule, what others are saying, and where to send your comments on the proposed rule.
OCC Issues Notice of Proposed Rulemaking to Exempt Residential Real Estate Transactions of $400,000 or Less from Appraisal Requirements
Excerpts: Rather than requiring an appraisal, the proposal would require that residential real estate transactions exempted by the threshold obtain an evaluation consistent with safe and sound banking practices.
Read what the OCC says in their announcement – one page www.occ.gov/news-issuances/news-releases/2018/nr-occ-2018-123.html
Comments will be accepted for 60 days from publication in the Federal Register.
Instructions in the full Full 69-page proposed rulemaking. Download the above link and search for comments
The word “evaluation” is included many times in the document. Google evaluation to see what it says.
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FDIC, OCC, Fed propose raising appraisal threshold for first time since 1994. Good analysis of how many loans would be affected:
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Push to cut back on home appraisals sparks controversy
By Ken Harney, long time nationally syndicated real estate writer who regularly writes about appraisal issues
Excerpt: The Trump administration wants to eliminate professional appraisals on a large number of home-sale transactions – a move that critics say could push the country back toward the see-no-evil days of mortgage lending that preceded the housing crash.
Includes comments from appraisers Ryan Lundquist and Pat Turner plus Appraisal Institute.
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Link to Appraisal Institute letter
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Get rid of appraisers while nobody’s looking
By Ryan Lundquist
Excerpt: I’m guessing these “evaluators” will be real estate agents who do BPOs, employees at banks and data firms, and probably some appraisers who need the work at $75-$100 a pop.
Read it here, plus the appraiser comments, of course.
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My comments:
– FIRREA increased the deminimus from $200,000 (1989) to $250,000 in 1994, but appraisals were still done. Why? Fannie and Freddie’s investors wanted them. FHA, VA, etc did not adopt the deminimus.
– What is an ‘evaluation’ and who does them? Hopefully, someone will tell me what is an evaluation?
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Bolwoningen Ball Houses Excerpt: Bolwoningen consists of 50 sphere houses. The balls are made of cement, reinforced with fiberglass. They are mounted on the base in the form of a cylinder. Each sphere’s diameter is 18 feet and each has 11 round windows. The layout of these structures is quite unusual. In the center of the sphere there is a bathroom and a tiny bedroom, and a living room and kitchen, are located on the second floor-level. The house can be completely disassembled and transported to any other place (the weight of this building is only about 2755 lbs). In addition, this building can be placed not only on the ground, but also on water, on a stationary platform. Bolwoningen Ball Houses – difficult appraisals!
Locals didn’t quite appreciate the vision of the architect, but there are plenty of tourists, who would love to visit or even experience living in these futuristic houses.
My comment: Fascinating!! It was built in 1984 and is surrounded by standard homes. Check out the 2 links above and/or google bolwoningen ball houses
Covid-19 Residential Appraisers Tips on Staying Safe For Covid Updates, go to my Covid Science blog at covidscienceblog.com Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!! To read more of this long blog post with many topics, click Read More Below!! ============================================
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Are Sheds Outbuildings?
Excerpts: Often, when appraising homes, I see MLS listings that call a shed an out building. Ask any appraiser and they will likely say that a shed is not an outbuilding. So, are sheds outbuildings?…
In appraising properties, there is a big difference in value between a shed and a large outbuilding. Most of the time, at least in my market, sheds really do not add any significant market value to a home. However, a large out building can add tens of thousands of dollars in value to a home…
Well written and worth reading:
My comments: I never really thought about this before, even though I see a lot of “sheds”…
Covid-19 Residential Appraisers Tips on Staying Safe
For Covid Updates, go to my Covid Science blog at covidscienceblog.com
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To read more of this 11-8-18 long blog post with many topics, click Read More Below!!
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A Map of every building in AmericaExcerpts: Classic maps answer questions like: How do I get from Point A to Point B? These data images, instead, evoke questions – sometimes, simply: What’s that? City and building maps for appraisers
We found fascinating patterns in the arrangements of buildings. Traditional road maps highlight streets and highways; here they show up as a linear absence.
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In the August 8 2018 issue of this email newsletter, I published the link
Visualizing the Hidden ‘Logic’ of CitiesExcerpt: Some cities’ roads follow regimented grids. Others twist and turn. See it all on one chart.
Excerpt: In Chicago or Beijing, any given street is likely to take you north, south, east, or west. But good luck following the compass in Rome or Boston, where streets grew up organically and seemingly twist and turn at random.
Fascinating!! Check it out at:
Covid-19 Residential Appraisers Tips on Staying Safe For Covid Updates, go to my Covid Science blog at covidscienceblog.com Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!! To read more of this long blog post with many topics, click Read More Below!! ===========================================
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Do Tandem Bedrooms and Garages Impact Value?
Excerpt: There is less privacy in the one bedroom because it must be walked through to get to the other bedroom. This is considered to be functional obsolescence.
This type of situation is most often found in older homes. I have seen this type of situation many times on the second floors of many bungalow or cape cod style dwellings I have appraised. Although, it can exist in any style home.
My comment: I see tandem rooms a lot and sometimes tandem garages. I think I have finally convinced the local agents not to call them bedrooms. Of course, some insist on using Assessor data, which has not been updated since 1979, when Prop 13 passed and re-assessments stopped unless there was a sale or new construction.
ADD LINKS FOR HUMOR AND BIZ TIPS
Covid-19 Residential Appraisers Tips on Staying Safe
For Covid Updates, go to my Covid Science blog at covidscienceblog.com
Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!
To read more of this 10-11-18 long blog post with many topics, click Read More Below!!
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