Posts Tagged USPAP

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NOTE: Please scroll down to read the other topics in this long blog post on USPAP and Personal Inspection, GSE Appraisal Modernization, Transaction costs and values including real estate commissions, unusual homes, mortgage origination stats, etc.

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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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NOTE: Please scroll down to read the other topics in this long blog post on non-lender appraisals, economics analysis, Fannie getting rid of appraisers?, unusual homes, mortgage origination

The Future of Residential Lender Appraisers

The End of Lender Appraisals?

By Ann O'Rourke on August 4, 2023 / appraisal business, bias, real estate market, USPAP / Leave a comment

Tags: appraisal business, Fannie, real estate market, USPAP

The End of Home Appraisals?

By Jeremy Bagott, MAI

Excerpts: In his 1946 essay “Politics and the English Language,” the late British novelist, essayist and critic George Orwell examined the connection between political orthodoxies and the debasement of the English language. In a truly Orwellian move, mortgage giant Freddie Mac recently announced its intent to censor an arbitrary collection of words such as “desirable,” “safe,” “well-kept,” “student” and “crime” when they appear, in any context, in the hundreds of thousands of appraisal reports it relies on in mortgage underwriting. It would be hard to make this up.

As with all banned words, Freddie’s list will lead to the need to ban additional words over time as appraisers, expunging the word “desirable,” will find synonyms when analyzing market reaction to the views of two homes or to the cul-de-sac location of a home versus the midblock location of a comparable. When discussing how market participants view side-by-side school districts, appraisers will figure out they can use synonyms like “advantageous,” “preferable,” or “beneficial” instead. Soon, these words, too, will need to be banned. In a college town, the banned word “students” will become “matriculants,” a word that will likewise need to be banned.

The attack on the protected speech of independent appraisers erodes their ability to describe how the properties they appraise relate to the preferences of market participants. The censorship is part of a march toward what appraiser and podcaster Phil Crawford has coined “universal basic home value” – a utopian vision among idealogues in which government technocrats dictate the supposed value of a property using algorithms and machine learning. The censorship began with Fannie Mae, and has now predictably spread to Freddie Mac.

To read more plus appraiser comments, click here

My comment: Worth reading. Lots more AMC/lender appraisal correction requests. Last week’s email had a discussion of the “words” which got a lot of clicks by appraisers wanting more information.

Fannie: Words and Phrases in Appraisals

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NOTE: Please scroll down to read the other topics in this long blog post on non lender appraisals, USPAP, Bias, real estate market, mortgage rates, unusual homes, mortgage origination

FHA: Cosmetic vs. MPR Repairs

By Ann O'Rourke on May 26, 2023 / bad appraisers, bias, FHA, lender appraisals, USPAP / Leave a comment

Tags: bias, FHA, mortgage lending, USPAP

Cosmetic vs. MPR Repairs: Guidance for FHA Appraisers

By: McKissock

Excerpts: If you are appraising a property that needs some cosmetic repairs but meets FHA minimum property requirements (MPR) in its current condition, you should make the appraisal “as-is.” Here is some guidance on cosmetic repairs vs. MPR repairs.

Topics include:

When can an FHA appraisal be completed “as-is” vs. “subject to”?
Cosmetic repairs Examples
MPR repairs Examples
Conditions that require inspection Examples

To read more, click here

My comments: If you do FHA appraisals, read this blog post. Photos and lots of examples. I quit doing FHA appraisals in the mid-1980s because of the inspection requirements compared to conventional appraisals, that did not have the requirement.

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The future of residential appraising

Appraiser Professional Goals

By Ann O'Rourke on January 4, 2023 / non-lender appraisals, real estate market, USPAP / Leave a comment

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

1-6-23 NEWSLETTER

Appraisers Share Their Top Professional Goals for 2023

By: McKissock (Survey)

Excerpts:

Maintain my current business (26%)
Earn a designation or certification (16%)
Grow my business (15%)
Prepare for retirement (12%)

“I would like to turn over my appraisal business to my daughter, who is certified.”

Should have retired last year but put it off due to the high amount of requests!”

After 23 years in appraising, which was very beneficial for me and my customers, I’m preparing for retirement.”

Achieve a better work-life balance (10%)
Other (6%)

To read more, including personal comments from appraisers, click here.

My comments: The post has links to some topics above with many tips. I have recently been writing about many of these topics since the market changed.

I write about non-lender work, staying up when business is down, retirement planning, and more in my monthly newsletter. I will be writing soon about upgrading to Certified General. I have always done both commercial and residential. My business has been much more stable as I can shift between them when the appraisal markets change, especially fees.

What are you planning to do in 2023? Now is the time to learn all the features in your MLS and forms software, upgrade your skills by taking seminars and classes, and more.

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NOTE: Please scroll down to read the other topics in this long blog post on USPAP and non-traditional appraisals, Non-lender appraisals, reos, tear downs, unusual homes, mortgage origination stats, etc.

10-12-17 Newz//FHA-Appraisers responsible for water quality reporting?, Hybrid appraisal survey)

Appraisals – Check the Water Source!

By Ann O'Rourke on June 17, 2022 / appraisal, liability, real estate market, USPAP / Leave a comment

Tags: appraisal, appraisal how to, real estate market, USPAP

Excerpt: We continue to see claims alleging that the rural property appraiser failed to adequately identify or report details surrounding a water source. In one claim, the appraiser correctly noted that the property was serviced by a “private water well.” It was later discovered that the well was not located on the property which was appraised. Unfortunately, the well was actually located on an adjacent lot that, at one time, was part of the subject lot prior to the lots being subdivided.

My comments: An appraiser lost a lawsuit because he said the vacant parcel had public water access. It did not even though many lots nearby were developed. Nearby, I noticed a large water tank. It was shared by four nearby homes. This was not in a rural area. I worked for 4 years in rural areas. Water access was critical. If there was no access, trucks had to bring the water.

Appraisers – check the water source!

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NOTE: Please scroll down to read the other topics in this long blog post on real estate market, USPAP and contracts, unusual homes, mortgage origination stats, etc.

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My Comments on Market Changes

My inbox is flooded with news emails about opinions on what is happening now and forecasts for the future. (Most of the information in these newsletters comes from emails. I am on many email lists.) It looks like the change is starting because of increasing mortgage interest rates. I have included some of the articles below.

Fannie and Freddie have long said that they want appraisers to tell them about their markets. Include graphs and charts in your appraisal to show your clients what is happening now and why they need human appraisers.

It is extremely important for appraisers now to closely track changes in your local markets at least once every day and tell your lender clients about it. When will it affect your market? No one knows if there will be foreclosures or when they will start. The number of potential buyers will decrease as rates go up in many markets.

Segments may be very different from the overall stats. A few examples:

Different price ranges – first-time homebuyers, high end
New homes – what is happening?
Detached vs. townhomes and stacked condos.
All cash and investors
How many offers
No inspections or appraisals?

COMPS ARE THE PAST. YOU MUST KNOW YOUR MARKET TRENDS. TRACK AND GRAPH THE NUMBER OF LISTINGS VS. PENDINGS AND EXPIREDS, DAYS ON THE MARKET, PRICE CHANGES, ETC.

Today is NOT the same as 2008+, with its massive fraudulent loans made to unqualified buyers. Computer modeling did not predict the 2008 crash. Many were in denial that it was coming and refused to listen to appraisers. We have never seen a pandemic real estate market before. Did anyone think in early 2020 that home values all over the country would go off the charts? No one did. Appraisers wrote up long disclaimers about how they did not know the effects. Some still include them in their appraisal reports today.

Watch the excellent 4-minute video with Mark Zandi, “There’s a comeuppance coming in the housing market”. It discusses how today is different from 2008 and what is happening today. Before becoming the chief economist of Moody’s Analytics, he was a real estate economist. I listened to him for many years about real estate economics. He is very savvy. I agree with what he says about real estate. I am unsure about inflation. To watch the video, click here

I have been writing about these upcoming changes in these newsletters for a while now. Ryan Lundquist writes about this almost every week. He has lots more details and examples of graphs that can help you see what is happening in your market. www.sacramentoappraisalblog.com He writes for the Sacramento, CA market but what he writes is relevant for other markets also.

Two days ago the Fed raised rates by 0.75%. Recession? Lower inflation? Real estate market?

Appraisal Obsolete? Now or in the Future?

Appraisal Comps in Lopsided Markets

By Ann O'Rourke on February 11, 2022 / ANSI, appraisal, liability, USPAP / Leave a comment

Tags: ANSI, appraisal how to, liability, USPAP

Different colorful shapes wooden blocks on beige background, flat lay. Geometric shapes in different colors, top view. Concept of creative, logical thinking or problem solving.

Choosing comps in a lopsided market

By Ryan Lundquist

Excerpt: QUESTION: With so many listings receiving offers above list, and people having to pay the shortfall between the appraised value and the contract price, how do appraisers look at comps? If a property sold at $580,000, but it actually appraised for $547,000, and the buyer paid the difference, which number do you use? $580,000 or $547,000?

ANSWER: Here are a few things on my mind.

1) Weigh the comps:

In any market (not just today), we have to weigh the comps. Or another way to say it is, we have to appraise the comps so to speak. What I mean is if something clearly sells for too much, it’s reasonable to give that property less weight in our analysis. Likewise, if a property sells for too little, we might also give less weight to that sale. Granted, selling for too little isn’t as common lately, but in past markets we regularly considered whether short sales or bank-owned sales sold below market value.

2) One sale doesn’t make or break the market:

It’s important to note one sale doesn’t make or break the market. This means one lofty “lone ranger” sale doesn’t all of a sudden mean the rest of the market will go to that level. This would be like saying that record-breaking $7M sale in Shingle Springs from August will pull the rest of the market up. Nah, I don’t think so. Or Zillow buying a house for $40,000 more than the comps will cause the rest of the market to rise. Nope. If one sale closes at $580,000, but the rest of the market is below $550,000, we won’t arbitrarily accept $580,000 as the new neighborhood price threshold. The same would hold true if a different house sold at $450,000. This one “low ranger” (sorry) won’t automatically drag the rest of the market down.

To read more plus lots of comments, click here

My comment: Some good comments and tips for this crazee market!!

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NOTE: Please scroll down to read the other topics in this long blog post on unusual homes, surplus vs. excess land, ANSI, USPAP, Liability, mortgage origination stats, etc.

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Market Decline Coming for Appraisals?

By Ann O'Rourke on September 10, 2021 / appraisal, Appraisal Subcommittee, humor, liability, real estate market, time adjustments, USPAP / Leave a comment

Tags: adjustments, humor, liability, real estate market, USPAP

Is There a Market Correction on Its Way?

by Steven W. Vehmeier

Excerpt: When will the market correction arrive?

I have no idea, but there will be warning signs, and that’s what this blog article is about. Fluctuations in market activity are common, but unseasonal and ongoing changes of any of the signs listed below can often be red flags. Additional indicators can be some of the factors that led up to the last market bust; there are plenty of articles online with which to familiarize yourself.

What will be the early signs?

Some early warning signs of housing market correction are:

A) Listing inventory in MLS starts to climb steadily. Increasing inventory is generally a sign that buyers have stopped buying (due to prices being too high or a lack of consumer confidence), or there are just fewer ready, willing, and able buyers in the marketplace.

B) Days on Market for listings increase. This event is usually linked to item (A) above.

C) Listing prices begin to stabilize, and reductions in listing prices become more common, which is a sign the market is becoming saturated…

So many appraisers missed the early signs in the last boom’s bust that resulted in claims (valid or not) of over-valuations followed by lawsuits, E&O insurance claims, and regulatory disciplinary actions. Maybe this time, we should pay closer attention to the indicators…

To read lots more tips, click here

My comments: Most Excellent list of what to look for. Very comprehensive. I have been appraising during many up and down cycles in Northern California, starting in the late 1970s at 2%+ per month, followed by a crash in 1980 when interest rates went up to 15%+. Those were the days when lenders told appraisers not to make time adjustments!! Even though we don’t like the 1004mc, it forced lenders and appraisers to look at price changes.

No one knows when the increasing market peaks, but there are signs of a decline, listed in the blog post above. I sold my house in March 2008 and did not anticipate the market crash a few months later. I was very lucky. There had been some modest price declines for about 6 months previously.

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NOTE: Please scroll down to read the other topics in this long blog post on liability, Market declining?, Humor, unusual homes, USPAP, mortgage origination stats, etc.

Subjective Language in Appraisals

By Ann O'Rourke on August 6, 2021 / appraisal business, appraisal how to, real estate market, USPAP / Leave a comment

Tags: appraisal business, appraisal how to, bias, real estate market, USPAP

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Using home’s previous sales in appraisals

What Types of Sales For Appraisals

By Ann O'Rourke on May 28, 2021 / adjustments, appraisal business, FHA, george dell, USPAP / Leave a comment

Tags: adjustments, appraisal business, FHA, state appraiser regulators, USPAP

Arm’s Length or Another Type of Sale? The 7 Sale Types Explained

What types of sales for appraisals

Excerpts: As a real estate appraiser, whether you’re considering the current terms of sale or analyzing previous sales of the subject property or comparable sales, it is imperative to know whether a sale is an arms-length transaction or a different type of sale. Sales due to a job relocation, estate settlement, foreclosure, or divorce may sell for less than the property’s market value.

By knowing the type of sale, you are better able to reconcile a current opinion of market value that falls above or below a current or recent transaction for the subject property.

Here are the seven valid sale types, explained in detail below:

REO sale
Short sale
Court ordered sale
Estate sale
Relocation sale
Non-arm’s length sale
Arm’s length sale

To read more, click here

My comment: Worth reviewing. Some good tips, especially for today’s crazy sales market!

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NOTE: Please scroll down to read the other topics in this long blog post on FHA regs, USPAP, State Boards, appraisal business, unusual homes, mortgage origination stats, etc.