Price per square foot not very reliable for appraisals

By on June 7, 2019   /   Fannie, hybrid appraisals, lender appraisals, mortgage loan volume, real estate market, square footage, Strange homes, unusual home   /   Leave a comment
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Why price per square foot is not the appraisers choice

By Rachel Massey

Excerpt: Often, buyers and sellers are under the impression that it is simple to price a house by its square footage. Nothing is further from the truth, unless of course, all the comparable properties considered are within a couple square feet of each other and have the same quality and condition and are in the same immediate neighborhood with no variation in the value of the site.

Underneath all is the land. This means that a house that sits on a hypothetical 60×120 sqft site should have the same underlying value if the house were 1,000 sqft or 2,000 sqft. If land is selling for $50,000 for this 7,200 sqft lot, then the value of the land does not change in value because it has a larger or a smaller house on it.

For more information and to check out the graphs click here

My comment: Good explanation and graphs. Written for buyers and sellers but a good explanation when you are trying to explain why Price per sq.ft. often is not reliable. Also, a very good blog post marketing to buyers, sellers and real estate agents.

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When 1,000 square feet doesn’t count in an appraisal(Opens in a new browser tab)

What is Included in Appraisal Square Footage?(Opens in a new browser tab)

Tax records and Square Footage in Appraisals(Opens in a new browser tab)

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Don’t pick appraisal comps the old way

By on May 24, 2019   /   appraisal business, hybrid appraisals, unusual home, unusual homes, va   /   Leave a comment
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Are you violating USPAP every day?

If you pick comps the old way, you may be violating USPAP every day!

Excerpts: (In the past) Data was hard to get. I was taught it was only necessary to use only three or four comps. And only a few comps were available. I did learn the importance of bracketing from my trainers (it was nowhere in my appraiser education). I was diligent, and of course, I picked my necessary and available comps carefully. Don’t pick appraisal comps the old way.

Then things changed. No one noticed. MLS came on line. Income properties came online. Public records came online.  All relevant sales became available. Instantly. Without thinking, I ignored the “as available” rule. But stuck to the ‘as necessary’ rule. And heck, everybody used just three comps. In fact, USPAP says I should do what my peers would do. And they all used just three or four.

So, what changed?

Today in most areas, all the sales are available. But are they necessary? Well no. All my peers use just three or four, so it is ok. But what if I want to do more than achieve credible results?

To read more, click here

My comment: I love George’s Most Excellent headlines plus his writings!! His blog posts are short, as they should be. But, sometimes we want to read more. The June issue of the paid Appraisal Today will have his 6-page article: “Old Versus New: Conflict or Opportunity?” about the past, current and future in appraisal analysis. Very interesting!!

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Dancing and Crooked Houses for Appraisers

By on May 17, 2019   /   hybrid appraisals, marketing, mortgage loan volume, real estate market, unusual homes, weird homes   /   Leave a comment
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Krzywy Domek, The Very Crooked Little House of Sopot, Poland

Woops!! I forgot to include this in last week’s newsletter!!

Just For Fun!!

Excerpt: In 2004, the Polish architecture firm Szotynski & Zaleski built a wonderfully illusory building in Sopot, Poland that doesn’t quite look real. The design was based upon whimsical, fairy tale sketches of artist Jan Marcin Szancer and is quite aptly named “Krzywy Domek” or crooked little house. The building’s front facade is made up of crooked lines and distorted shapes that recall childhood cartoons, but the back of the building is a rather standard setup that leads to the main shopping area.

Check out the videos and fotos.

My comment: Fascinating!! I think this is the most crooked house I have ever seen. No photoshopping done on fotos!!
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The Famous Dancing House of Prague by Frank Gehry

Another Just for Fun House!!

Excerpts: The building is also affectionately known as “Fred and Ginger” due to its resemblance to a perpetually swaying couple. Like the Crooked House of Sopot, Poland, the unusual lines of the building stand out from the rest of the neighborhood.

Lots of fotos at:

Brief summary of details: http://architectuul.com/architecture/the-dancing-house  Can also google it for lots of background info.

My comments: Take a break from writing up your appraisal reports and Take a Look at the photos!! And be glad you don’t have to appraise a house that looks like this ;>

Be sure to scroll down to the bottom of the post to see photos of Ghery’s other strange buildings!!

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Appraising Hobbit Houses

By on April 26, 2019   /   AMCs, Appraisal Foundation, Appraisal Qualifications Board, appraisal regulations, Appraisal Standards Board, marketing, Mortgage applications, mortgage loan volume, Strange homes, unusual home, unusual homes, weird homes   /   Leave a comment
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Hobbit Houses in Charlevoix, Michigan

Just For Fun!!

Excerpts: Growing up in northern Michigan in the early 1900s, Earl Young was obsessed with boulders. Glacial boulders, to be exact-ones moored in fields, forests, and on lake coastlines across the state thanks to the slow march and retreat of glacial ice during the Precambrian age. Appraising Hobbit Houses in Michigan is a challenge.
The homes he designed will stop you in your tracks, as one did the last time I was there, passing by on a bike. Call them “mushroom houses,” “hobbit houses,” “boulder houses”; everyone has a different name for them. They’re often described concisely, if vaguely, as “organic.” Though some see Frank Lloyd Wright’s influence, they’re distinctly Young.

Fascinating! Lots of fotos and info at:
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Lord of the Rings – Hobbit houses from the movie(Opens in a new browser tab)

Hobbit House of Montana(Opens in a new browser tab)

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Reliable MLS Data important for appraisals

By on April 18, 2019   /   Appraisal Foundation, Mortgage applications, real estate market, state appraiser regulators, Strange homes, unusual homes, weird homes   /   Leave a comment
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The Importance Of Accurate MLS Information

Accurate MLS Information Is Necessary For Reliable Appraisals

By Tom Horn

Excerpt: Topics include
– Accurate MLS Information Helps With Adjustments
– Square Footage Should Be Accurate
– You Can’t Measure It If It’s Not Described
Read the full article plus the comments.

My comment: Written for real estate agents. Maybe you can use some of it in your appraisal blog focusing on real estate agents. Of course, with Big Data, MLS inaccuracies are propagated and used for AVMs, including CU’s AVM.
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Generally speaking, how accurate do you find MLS data in your area?

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Every unusual home has appraisal comps

By on April 4, 2019   /   adjustments, AVMS, bpos, deminimus, FHA, marketing, Mortgage applications, Strange homes, unusual home, weird homes, weird properties   /   Leave a comment
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Tips for choosing comps on a unique home (straw-bale house)

By Ryan Lundquist
Excerpt: It almost sounds like the big bad wolf story, but there really are homes built from straw. Literally. Today I want to mention a few things about this type of construction, share some photos of a local straw-bale house, and then talk briefly about how I approached appraising this one.
Worth reading to find out what Ryan did!!

My comment: Very good tips on appraising unique homes. No lender issues as the appraisal is pre-listing and not for a lender… Sacramento  is a Very Strange place for a straw-bale home!!

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Using home’s previous sales in appraisals

By on March 21, 2019   /   adjustments, appraisal how to, marketing, mortgage loan volume, real estate market, unusual home, unusual homes   /   Leave a comment
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The problem of giving too much weight to previous sales (or not enough)

By Ryan Lundquist

Excerpts: It must be worth more than it sold for in the past, right? In many cases, YES. But sometimes NO. Let’s talk through some things to consider when pulling comps and noticing a previous sale. I find many of these points coming up lately in conversation, so I hope this is helpful.

8 issues are discussed.
Here are a few
2) Unique property:
3) Unicorn buyer overpaid
8) Not penalizing because it sold too low

Closing advice: I recommend paying close attention to previous sales to get clues to understand how a property fits into the market. But don’t get so stuck that you don’t see the most important thing – current comps.

Good topic I have not seen discussed in detail before. Worth reading. Lots of comments!!

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Condo vs. Townhouse for appraisers

By on March 15, 2019   /   AMCs, appraisal how to, AVMS, commercial appraisal, data, listings, Mortgage applications, mortgage loan volume, real estate market, Strange homes, unusual homes, weird homes, zillow   /   1 Comment
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Is It a Condo, a Townhouse, a Site Condo or None of the Above?

Excerpt: When appraising townhouses, I always search the MLS for both single-family attached sales as well as condominium sales. Why? It’s because at times, there is confusion between the differences. Often I see real estate agents list townhouses as condos when they are not actually condos and visa versa.

I totally understand why. When it comes to townhouses, it is impossible to know from an outward appearance whether or not it is a condo, or not. Before we get into that, what is a condominium and what is a townhouse?

Well written article. Worth reading.

My comments: The first question in appraising is always “what are you appraising?”. Some appraisers just look at what structure is there. You are appraising the form of ownership, the land and what is attached to the land. With condominium form of ownership, you own the airspace. It does affect what you can do with a home. Some people don’t like HOAs and dues. I sold my house on the water in 2008. There was a large rear yard that was on a “tidelands lease” with an annual payment to the city. It was recently re-listed and only included the original 4,000 sq.ft. lot, not the leased land. Both showed up on plat maps. I wonder what the appraiser for the sale will say about it?

About 20 years ago I appraised a detached home in a project built in the 1980s with both attached (stacked condo style,  duets – sets of 2 semi-detached homes, and townhome (attached) style) plus detached homes. The owner, the HOA president was surprised to learn that they were all condos. I had a title report I showed to him. (The detached homes are now called site condos.) Another nearby small development of sets of two homes (duet or semi-detached) built in the 1960s did not have any common ownership or dues. I have seen these in other nearby cities also.

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Appraisals and Altered Listing Photos

By on March 7, 2019   /   adjustments, appraisal business, appraisal how to, Fannie, mortgage loan volume, real estate market, Uncategorized, unusual home   /   Leave a comment
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Digitally-doctored listing photos are on the rise

Excerpts: It will cost $2.40 for a paint job, $24 to replace flooring, and $40 to remove a wall or add a swimming pool.

Digital photo manipulation has become so widespread and cheap that home sellers are increasingly using the technology to spruce up their listings, the Wall Street Journal reported. This has the potential to create new headaches for end users, investors, appraisers and brokers…

Furthermore, with federal regulators pushing for automated appraisals that will make use of online listings, the hazards of doctored images could be spread to the general public.

My comments: How do AVMs and CU deal with this? Appraisers can always contact the agent to confirm what the home looked like. CU robo emails/calls to agents and somehow integrate this into the data?

Lenders and AVMs are now using agent MLS comments. I recently spoke with an appraiser where the lender disputed one of her comps because the MLS mentioned it was “close to shopping” and she did not. Yes, it was very close to a historic shopping street, but there was little to no off street parking on this street, as it was taken up by employees in the stores. The comp had 9 off street parking places for 2 units and sold for a premium price. Typically there is 1 or 0 parking spaces per unit in the historic apartments on the comp’s street. I recently tried to go to an open house on the street. The closest parking space was 3 blocks away. I skipped the open house. The agents often mentioned “close to shopping” to say something positive about their listing’s location.

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Zestimate Obsession and an Appraisal

By on February 21, 2019   /   real estate market, Strange homes, weird properties, zillow   /   Leave a comment
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Obsessively Checking Zestimates

Excerpts: If you own a home, or want to own one, chances are you’ve spent some time with one of the many apps that estimate home values. As real estate prices have risen in recent years, watching one’s equity grow – at least on paper – has become something of a national pastime. Some would call it an obsession.

“I check my Zestimate way more than my 401(k),” said Bradley Reed, a homeowner in Cleveland, referring to Zillow’s proprietary tool.

“On a slow week, I might check it every other day,” said Krista Burns in Doylestown, Ohio.

Listen or read the story and twitter comments, see some fotos, etc. Add your comment at the bottom.

My comment: Zesimates are free, but often not accurate. They work well in newer conforming subdivisions, but not well with older homes.
I listen to the marketplace podcast almost every day, listened to this one last week, and really liked it. Fortunately, with this link you can read the transcript or listen to it plus read some twitter comments. I know that real estate agents have lots of problems with it. I wonder how many appraisers look at Zestimates? You may be surprised!! Some even include it in their appraisal reports and explain why their value is different.

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