Newz: Fannie Update, Concessions Are a Mess, State Board Complaints
October 4, 2024
What’s in This Newsletter (In Order, Scroll Down)
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State Board Complaints and Renewal
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Q3 2024 Fannie Mae Appraiser Update – Concessions, Rural, Environmental Hazards
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$47 Million Ski Chalet With Private Tesla-Style Gondola, Bowling Alley, and Basketball Court
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September 2024 Real Estate Market Update: What Appraisers Need to Know By Kevin Hecht
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The hot mess of concessions in real estate By Ryan Lundquist
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That A-Frame Life: What It’s Really Like To Live in These Triangular Houses
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Q3 2024 Fannie Mae Appraiser Update – Concessions, Rural, Environmental Hazards
Excerpts:
Rural
Worth reading with links to Fannie info, including a link to: Free Fannie online Rural Appraisal Challenges eLearning course. Plus other tips.
Environmental Hazards
While Fannie Mae does not expect the appraiser to be an expert in the field of environmental hazards, we do expect appraisers to analyze and report any information about environmental hazards that is available in the normal course of business…
If an appraiser has knowledge of or identifies an environmental hazard in or on the subject property or on any site within the vicinity of the property, we require the appraiser to…
Seller Concessions
The article about seller concessions in our December 2023 Appraiser Update generated a lot of questions and buzz.
First, we heard that some appraisers, in reaction to our article, adopted a practice of always adjusting dollar for dollar for seller concessions. While this may seem sensible from a theoretical perspective, it could have adverse unintended consequences (such as undervaluation) if the concession did not actually have a dollar-for-dollar impact on the price. Making either assumption (that there is no impact or that the impact is dollar-for-dollar) is not the correct approach…
PSAs – UAD, Bias with useful links to Fannie info
To read more, Click Here
My Comments: Read the concessions section to see what Fannie Mae says on this hot topic! Plus the useful info and links on other topics above.
See Ryan Lundquist’s post below on Concessions – A Mess
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$47 Million Ski Chalet With Private Tesla-Style Gondola, Bowling Alley, and Basketball Court in Utah
Excerpts: 6 bedrooms, 7.5+ baths, 17,567 sq.ft., 4.97 Acre lot, built in 2022
Environmental risk: increasing fire risk
Price reduced from $65 million. Has been on and off the market for awhile
The seven-story behemoth was developed by the finance tech executive Doug Bergeron, according to the Wall Street Journal, which notes that the investor bought the Deer Valley land for about $3 million in 2016 and took years to construct the remarkable home there.
“Typically, when somebody builds a home with the intention of selling, they do not spend six years on every single detail to make sure that the home stands out with the latest and greatest features the market has ever seen,” Benson tells Realtor.com®. “I feel incredibly lucky to be able to work with Doug Bergeron on this incredible masterpiece that he has created. ”
A private gondola that whisks residents straight from their home to the ski slopes—and is so high tech it has garnered comparisons to a Tesla car.
Features include: 60′ indoor/outdoor stainless steel pool, wellness spa with a world-class gym, Himalayan salt room, cold plunge pool, hot tub, hammam, ice fountain, infrared sauna, massage room, indoor sports court with volleyball/basketball/pickle ball/climbing wall, golf simulator, bowling alley, a versatile living/media room with Steinway-Lyngdorf audio and 200”-inch Barco 4k digital cinema laser projection system, a panoramic tower situated above the trees to take-in the breathtaking views and much more.
To read more, Click Here
To read the listing with 34 photos and listing details, Click Here
My comment: Tesla-Style Gondola? It does have a pickleball court, fortunately. Yay!
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September 2024 Real Estate Market Update: What Appraisers Need to Know
By Kevin Hecht
Excerpts: They say the only thing certain in life is change—and in today’s housing market, that couldn’t be more accurate. With interest rates on a slow decline, new housing starts rising, and affordability challenges persisting, real estate appraisers need to keep their eyes on the ever-shifting landscape.
Let’s dive into the latest trends that could impact your work as an appraiser, and don’t worry, we’ll make it fun along the way—because who doesn’t enjoy a good housing market analysis?
Topics:
1. Interest rates are falling (slowly but steadily)
Key takeaway for appraisers: Keep an eye on mortgage rate fluctuations, as they’ll directly impact both refinancing activity and housing demand. You may see a gradual increase in appraisal orders but don’t expect a tidal wave of new transactions just yet.
2. Housing starts are up, but builders are facing challenges
3. Existing home sales hit a new low
4. Builder confidence is on the rise – Key takeaway for appraisers: As builder confidence rises and more homes come onto the market, be prepared to adjust your valuation approach. New construction can influence the pricing dynamics in your market, especially as builders use incentives to entice buyers.
5. Affordability remains the elephant in the room
Conclusion: Navigating the shifting Market…
To read more, Click Here
My Comments: If you do residential appraisals read this post. I have a few excerpts above. One of the best posts by the author I have read. Everything on the list above includes a “Key takeaway for appraisers”.
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New in the October 2024 issue of Appraisal Today:
- What is a Good Appraiser?
- USPAP and Functional Obsolescence, By Tim Andersen, MAI
- Manifesting Support for Adjustments, By Steven R. Smith, MAI, SRA
- Internal Cash Controls Keep Employees Honest
- Zillow’s Unreliable Square Footage, By Jamie Owen
Appraisers and Client Opinions of Good Appraisers. They can differ widely.
When does functional obsolescence begin to accumulate in an appraiser? For an appraiser to be functionally obsolete is not to choose to ascend to a specific level of certification, and then stop ascending. Very interesting, and different, analysis.
Interesting analyses plus examples of Verification By Steve Smith.
Who does your bookkeeping? Be sure you have good controls in place. Embezzlers can be anyone, including someone you would never suspect.
Zillow is used by many people. There many square footage issues. Article includes Zillow sample images and examples of divorce and tax appeal issues with sq.ft.
To read more about these topics, plus 2+ years of previous issues, subscribe to the paid Appraisal Today at www.appraisaltoday.com/order .
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The hot mess of concessions in real estate
By Ryan Lundquist
September 25, 2024
Excerpts:
It’s a mess out there right now since the NAR lawsuit went into effect. Well, sort of. It feels messy that concessions information is no longer in MLS, there’s some confusion about how appraisers are handling some of this…
The Commission is Not a Concession
I’ve noticed quite a bit of confusion, so I want to hopefully clarify that the commission is not considered a concession from the appraisal perspective. This is how Fannie Mae, Freddie Mac, and HUD see it at this present time, and it’s why the seller paying for any portion of the buyer’s agent commission does NOT count toward the concessions allowed.
The commission is about compensation to the real estate agent, and concessions are things like a credit for repairs, credit for closing costs, personal property, rate buydown, etc… (not compensation). Yet, I get the confusion today because a seller might give a credit for the commission, so it really feels like a normal concession. Moreover, it seems like NAR is saying compensation can be a concession….
To read more plus over 25 comments, Click Here
My comments: A reliable analysis of concession vs. commission. Also, MLSs seem to be handling this differently. What does your MLS do?
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That A-Frame Life: What It’s Really Like To Live in These Triangular Houses
Excerpts: There’s something intrinsically romantic about A-frame cabins. Beyond the setting of lush forests and mountainous backdrops, the architecture itself makes these unique homes feel extra cute and cozy.
And at first glance, A-frames might not seem all that different from other cabin-like dwellings. After all, aren’t they just cabins with really high roofs? Well, not exactly.
The history of A-Frames
A-frames first started popping up in the United States in the 1930s and 1950s, when Americans had more disposable income for vacation homes. One of the first architects to popularize the design was Rudolph Schindler. His work is primarily found around Southern California, and he originally hails from Austria. This makes sense, considering A-frames were more common in mountainous European and Asian locales before making their U.S. debut.
Nowadays, many people choose to make A-frames their full-time homes. But there’s quite a big difference between renting one of these exotic cabins for a week and living in one. This is why we decided to dig in and hear from those who have done it and find out exactly what it’s like to call an A-frame home.
Topics:
1. Quirky, open-concept living – “A-frames tend to have unique layouts that can be fun and quirky and create spaces like reading nooks or meditation areas that you wouldn’t necessarily see in a house with a typical floor plan,” says real estate agent Angelica Ferguson, who regularly sells A-frames.
2. Limited square footage – “A-frames are often quite small, which isn’t always ideal—especially for larger families since there’s very limited room as you go upstairs,” says former A-frame dweller Michael Sawyer, of Ultimate Kilimanjaro. “I feel like it would be perfect for people who prefer to live a little more frugally as you only have the space you really need.”…d
3. Unique acoustics – “Where sound is concerned, an A-frame creates unique acoustics due to the angular design and steep pitch,” says Ferguson. “This can create a space that, while often very open and airy, also feels cozy and intimate.”
4. Sweeping views and natural light – This is great if you have a small family and would enjoy a cozy version of open-concept living—but keep in mind that it might not be a good fit for busier households where sharing space is a problem—like if one person constantly takes meetings while working from home
5. Maintenance is very roof-centered
To read more, Click Here
My comments: This is the first article I have read on living in A-Frames. Very interesting with lots of photos Plus a few homes for sale.
I have always wondered about the appeal of A-Frames. I have never lived in an A-frame home. There are not many in my area, but I have appraised a few. I definitely would not want to live in one, but it would be fun on as short vacation rental.
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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 finally going down. More work for appraisers. Definitely will be an appraiser shortage as many appraisers have retired or quit.
Mortgage applications decreased 1.3 percent from one week earlier
WASHINGTON, D.C. (October 2, 2024) — Mortgage applications decreased 1.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey for the week ending September 27, 2024.
The Market Composite Index, a measure of mortgage loan application volume, decreased 1.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1 percent compared with the previous week. The Refinance Index decreased 3 percent from the previous week and was 186 percent higher than the same week one year ago. The seasonally adjusted Purchase Index increased 1 percent from one week earlier. The unadjusted Purchase Index increased 1 percent compared with the previous week and was 9 percent higher than the same week one year ago.
“Last week’s incoming data showed an economy that is still growing at a solid pace, even as inflation continues to decline. As a result, mortgage rates were up modestly, with the 30-year fixed mortgage rate increasing slightly to 6.14 percent,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “With this move, refinance application volume declined on the week but remains almost three-times as high as last year’s pace.”
Added Fratantoni, “The news for the week was that more homebuyers appear to be entering the market. Purchase application activity was up for the week and increased more than 9 percent compared to last year at this time. Inventories of both new and existing homes have been increasing over the course of 2024, meaning that potential buyers have properties to look at and now have somewhat lower mortgage rates leading to better affordability.”
The refinance share of mortgage activity decreased to 54.9 percent of total applications from 55.7 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 16.6 percent from 15.0 percent the week prior. The VA share of total applications decreased to 15.4 percent from 18.3 percent the week prior. The USDA share of total applications increased to 0.4 percent from 0.3 percent the week prior.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) increased to 6.14 percent from 6.13 percent, with points increasing to 0.61 from 0.57 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate increased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $766,550) increased to 6.50 percent from 6.47 percent, with points decreasing to 0.36 from 0.50 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.06 percent from 5.99 percent, with points decreasing to 0.75 from 0.79 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The average contract interest rate for 15-year fixed-rate mortgages increased to 5.51 percent from 5.47 percent, with points increasing to 0.62 from 0.52 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
The average contract interest rate for 5/1 ARMs increased to 5.87 percent from 5.76 percent, with points increasing to 0.55 from 0.44 (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
When I first heard about the collapse of the Florida condo tower, I immediately thought about a drainage problem. Previous engineering reports revealed the problems – pool leaks, water not draining properly, etc. The condo building was constructed before building codes were changed to help avoid their problem. No one knows why the building started collapsing. Drainage Problems Can Damage Foundations
Excerpt: Psycho Kitty