FHA Handbook 4000.1 Appraisal Changes

By Dan Bradley

Excerpts: On January 18, 2023, HUD issued an announcement regarding revisions made to Handbook 4000.1. According to the announcement, the revisions included “enhancements and revisions to existing guidelines and various technical edits.”

The most significant of these revisions was the elimination of the requirement to include the 1004MC form as an attachment to the appraisal report.

Changes to the Handbook also include

FHA Handbook 4000.1 Appraisal Changes

By Dan Bradley

Excerpts: On January 18, 2023, HUD issued an announcement regarding revisions made to Handbook 4000.1. According to the announcement, the revisions included “enhancements and revisions to existing guidelines and various technical edits.”

The most significant of these revisions was the elimination of the requirement to include the 1004MC form as an attachment to the appraisal report.

Changes to the Handbook also include several other minor, but nevertheless meaningful, edits and clarifications to FHA appraisal requirements, including:

Under “Attic Observation Requirements,” a clarification was made regarding the appraiser’s obligation to “safely” access the attic. The language requiring a minimum “head and shoulders” access into the attic was deleted.

Under “Crawl Space Observation Requirements,” significant revisions were made, including removal of a bullet point list of MPR/MPS criteria for the crawl space. Also, language requiring a minimum “head and shoulders” access into the crawl space was deleted.

The changes outlined in the Handbook may be implemented immediately but must be implemented for FHA cases assigned on or after April 18, 2023.

To read more, click here

My comments: Many thanks to McKissock for telling us what we need to know. Includes a link to the “redline” version of 4000.1 so you can skip over most of it. Scroll down to “Updates, Revisions, Notifications” to get the redline versions.

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Revised FHA Handbook 4000.1 effective 9/14/15. Are you ready for the changes? Get the facts!!

Appraisal Business Tips 

Humor for Appraisers

To read more of this long blog post with many topics, click Read More Below!!

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

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

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10 homes built between 1682 and 1780

The oldest home (Photo above)

1. 12 Barrell Lane Ext, York, ME

Price: $3,900,000

Year built: 1682

York Harbor: This spacious Dutch gambrel offers waterfront views of a private peninsula.

6 bedrooms, 4 baths, 4,321 square feet, 0.46acre lot

The six-bedroom home boasts 4,321 square feet of updated space. Historic details include three fireplaces, restored hardwood floors, a staircase, and built-in cabinetry. The modern kitchen features wide-board pine floors and lots of windows to soak in the natural light. Enjoy scenic vistas from the front porch or back decks.

To see all 10 homes, click here

My comments: I’m sort of envious of East Coast appraisers with so many old homes. Click on the address at the top of each short description to go to the MLS with many photos and sometimes a video.

“One of the most quoted experts on housing markets, Jonathan Miller of real estate appraisal company Miller Samuel, won an unusually large 30-way bidding war for a Connecticut house built in 1755.” To read about How the ‘real estate whisperer’ won a 30-way bidding war and landed his dream house, Click here

I have read Jonathan’s weekly Housing Notes for many years. To subscribe, click here

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City National Bank To Pay $31M To Settle Redlining Claims

January 16, 2023

Excerpts: DOJ says settlement with LA-based bank is largest in department’s history.

Key Takeaways

City National is the largest bank headquartered in Los Angeles and among the 50 largest U.S. banks.

From 2017 through at least 2020, City National avoided marketing and underwriting mortgages in majority-Black and Hispanic neighborhoods.

Other banks in the county received more than six times as many applications in majority-Black and Hispanic neighborhoods.

City National opened only one branch in a majority-Black and Hispanic neighborhood in the past 20 years.

To read more, click here

My comments: I have yet to see this widely quoted in the news. Quite a contrast to all the references to appraisal “bias” in the news. Hmmm… Banks give a lot of money for political contributions. How much do appraisers contribute? How much extra money do appraisers make for “bias”???

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More layoffs at Reno-based Clear Capital AMC amid ‘seismic shift’ in housing market

Excerpts: Latest news comes after last year’s restructuring when Clear Capital laid off more than a quarter of its global workforce.

In addition to its Reno headquarters, the company also has offices in California and Minnesota.

To read more, click here

My comments: Will more AMCs downsize? The article source above is the local newspaper Reno Gazette-Journal. Keep a very close watch on your unpaid billings! Don’t let an AMC fall behind on your payments. Call, email, text over and over so you get paid. If they go into bankruptcy, employees get paid first. Fee appraisers seldom get anything.

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Thinking about non-lender appraisals but need more detailed information and advice?

I get many emails and calls from appraisers about this topic. I have been writing about non-lender work since I started my monthly newsletter in June 1992, and have done almost all the types of work I write about.

You will learn how lender and non-lender appraisals differ (there are significant differences). Popular topics include how to market to attorneys and get referrals from real estate agents.

Estate/trust appraisals, the most popular for residential appraisers, are included.

The most profitable appraisals are for divorces, where you testify as an expert witness at very high fees. I have done many of these and write about this in detail.

Also included are “niche” markets such as bail bonds, property tax appeals, and many more.

To read more about this topic, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.

If this article helped you get one more non-lender appraisal, it is worth the subscription price!

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If you have any comments or info on any topics, please hit the reply button!! I’m always looking for something new ;>

If you are a paid subscriber and did not get the January 2023 issue emailed on Tuesday, January 3, please email info@appraisaltoday.com, and we will send it to you!! Or hit the reply button. Be sure to put in a comment requesting it.

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Was This Home Overimproved or Underimproved?

By Jamie Owen

Excerpts: The Appraisal of Real Estate, fifteenth edition on page 352, states that “…the relationship between land and improvements and the relationship between a property and its environment must be in balance for a property to achieve its optimum market value. For example, a residential property with a one-car garage in a market that expects similar homes to have a two-car garage (known as an underimprovement) or too many expensive amenities for its location (known as an overimprovement or superadequacy) is out of balance.”

… Buyers who are looking for homes that are not electrified usually do not utilize more conventional forms of transportation such as automobiles. Most buyers interested in a home that has not been electrified also rely on horse and buggy as a common form of transportation. Therefore, having a stable and/or outbuilding might be more valuable than a more traditional garage to prospective buyers of properties that are not electrified.

To read more, click here

My comments: Worth reading. Written for homeowners but is a good “refresher” for appraisers with some unusual examples, such as non-electrified homes. Don’t miss the Fun Video at the end: “The Doodle House” by Mr. Doodle!

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Appraisal Turn Times Show Improvement in 2022

Excerpts: Reggora, an appraisal management software company, has announced its first-ever Appraisal Performance Index, a study to index appraisal operations trends across the mortgage industry.

The year 2022 began with interest rates close to 3%, and then climbed to 7% before retreating in mid-December, and this increase in rates caused mortgage volumes to plummet, creating a unique scenario where the number of loan originations went from too many for appraisers to handle to a manageable number and a reasonable flow of work.

Observations of the Index revealed, the average appraisal fee slowly dropped throughout the 2022 calendar year. The year began with an average fee of $620 per appraisal, and peaked in March at $635, but fell to $592 by November.

To read more, click here

To read the full, detailed and interesting study, “Appraisal Performance Index: 2022 Insights” click here 

My comments: Worth reading. Good graphs on fees, turn time, and revision requests. Read the full report for much more information, including regions and states.

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Gizmos Aplenty: Clever Berkshires Mansion Could Fetch $15.5M

Excerpts: The owners of an architectural marvel in New Marlborough, MA, are hoping to reel in $15.5 million for their extraordinary 300-acre estate. Known as Vergelegen, the 4,273-square-foot 10 bedroom main house built in 2014 has views of the Berkshire Hills and Taconic Mountains.

But the star attraction? That would be the home’s array of manual mechanisms that control some of its finest features.

The design of the 10-bedroom house is the brainchild of its art historian homeowners, along with U.S. architect Tom Kundig, British landscape architect Tom Stuart-Smith, and a Berkshires-based master builder.

Standout details of the industrial-style home include cantilevered decks and entire walls of glass that open up mechanically. While they might look difficult to operate, the hand-crank wheels are very easy to use.

Similar in design, there is a dumbwaiter from the ground floor to the upstairs spaces.

“There are walls of windows that operate on a cog-and-wheel design that allow you to easily open them up completely to the outdoors,” Fields says. When the window walls are ajar, the house mingles indoor and outdoor spaces. “When completely open, the sensation is akin to being in an elegant and comfortable tree fort, hovering above the landscape,” the architect’s website notes of the firm’s trademark gizmo.

To read more and see lots of interesting photos, Click here

Link to MLS with 69 photos click here

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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, go to www.mba.orgNote: 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 going up and down. Some appraisers are very busy, and others need more work. Varies widely around the country.

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Mortgage applications increased 7.0 percent from one week earlier

Mortgage applications increased 7.0 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 20, 2023. This week’s results include an adjustment for the observance of Martin Luther King, Jr. Day.

The Market Composite Index, a measure of mortgage loan application volume, increased 7.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 1 percent compared with the previous week. The Refinance Index increased 15 percent from the previous week and was 77 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 3 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 39 percent lower than the same week one year ago.

“Mortgage rates declined for the third straight week, which is good news for potential homebuyers looking ahead to the spring homebuying season. Mortgage rates on most loan types decreased last week and the 30-year fixed rate reached its lowest level since September 2022 at 6.2 percent,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Overall applications increased with both gains in purchase and refinance activity, but purchase applications remained almost 39 percent lower than a year ago. Homebuying activity remains tepid, but if rates continue to fall and home prices cool further, we expect to see potential buyers come back into the market. Many have been waiting for affordability challenges to subside.”

Added Kan, “Despite a 15 percent increase in refinances, they were still 77 percent behind last year’s pace, as rates remained more than two percentage points higher, thus providing very little refinance incentive for most borrowers who are locked into lower rates.”

The refinance share of mortgage activity increased to 31.9 percent of total applications from 31.2 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.5 percent of total applications.

The FHA share of total applications decreased to 11.9 percent from 13.0 percent the week prior. The VA share of total applications increased to 13.0 percent from 11.8 percent the week prior. The USDA share of total applications remained unchanged at 0.6 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.20 percent from 6.23 percent, with points increasing to 0.69 from0.67 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200)decreased to 5.92 percent from 6.08 percent, with points increasing to 0.41 from 0.40 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.22 percent from 6.26 percent, with points increasing to 1.10 from 1.05 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.54 percent from 5.58 percent, with points decreasing to 0.51 from 0.54 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs increased to 5.44 percent from 5.31 percent, with points increasing to 0.83 from 0.74 (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

Appraiser and Publisher Appraisal Today

1826 Clement Ave. Suite 203 Alameda, CA 94501

Phone 510-865-8041

Email  ann@appraisaltoday.com

Top Ten Reasons Why It Is Great to be an Appraiser!

10. Dazzle your friends with your knowledge of external obsolescence.

9. The wonderful world of rats, bats, and spiders.

8. Be a part of the profession blamed for the collapse of the savings and loan industry.

7. See places in people’s houses that usually require a search warrant to access.

6. Arouse the suspicion of an entire neighborhood when inspecting comparable sales.

5. Chance to really irritate annoying

Top Ten Reasons Why It Is Great to be an Appraiser!

10. Dazzle your friends with your knowledge of external obsolescence.

9. The wonderful world of rats, bats, and spiders.

8. Be a part of the profession blamed for the collapse of the savings and loan industry.

7. See places in people’s houses that usually require a search warrant to access.

6. Arouse the suspicion of an entire neighborhood when inspecting comparable sales.

5. Chance to really irritate annoying real estate salespeople.

4. Walk around holding a clipboard just like “Skip” down at the Jiffy Lube.

3. Spend hours writing volumes of supporting documentation to justify the market value of a property you already decided on when you pulled into the driveway.

2. See that some people really do hang those black velveteen pictures of Elvis on their living room walls.

1. Be one of a handful of people who know that USPAP is not a medical term.

Many thanks to reader Joe Ibach, MAI, for this great list! He doesn’t know the source…seems like it is one of those email/send/resends now floating around the Internet!

Appraisal Business Tips 

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!!

NOTE: Please scroll down to read the other topics in this long blog post on AMC fees, Real estate forecast, Google Business Profile, unusual homes, mortgage origination stats, etc.

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Record Share Of Sellers Give Concessions To Buyers

Excerpts: ‘Buyers are asking sellers for things that were unheard of during the past few years.’

Home sellers gave concessions to buyers in 41.9% of home sales in the fourth quarter, the highest share of any three-month period in Redfin’s records, according to a report from the technology-powered real estate brokerage.

Home sellers gave concessions to buyers in 41.9% of home sales in the fourth quarter. Concessions increased over 30% in the previous quarter and the fourth quarter of 2021.

A record 22% of home sales in the fourth quarter included both a concession and a final sale price below the listing price.

Sellers have built up so much equity during the pandemic that they can afford to dole out sizable concessions.

Concessions were less common in some metros compared to last year, including Austin, Texas, where sellers gave concessions to buyers in 33.3% of home sales, down from 38.1% a year earlier (-4.8 ppts). Next came Philadelphia (-2.7 ppts), New York (-2.4 ppts), and Chicago (-1.6 ppts).

Concessions were the most common in San Diego, with sellers giving concessions to buyers in 73% of home sales in the fourth quarter — another record for the highest share among the metros Redfin analyzed. San Diego also had the highest share a year ago. Next came Phoenix (62.9%); Portland, Ore. (61.6%); Las Vegas (61.3%); and Denver (58.4%).

To read more, click here

My comments: It has been a while since appraisers made negative concession adjustments. This is national data. What is happening in your market? MLS info can be unreliable. You may need to call agents to see the amount of concessions offered and make an adjustment based on its effect on market value.

Read Ryan Lundquist’s blog post below on how appraisers handle concessions.

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Average AMC Appraisal Fee to the Appraiser

By Dave Towne 12-29-22

Average AMC appraisal fee to the appraiser: AMCs are taking far more of the borrower-paid fee this year than last year.

Excerpts: Appraisers, I recently sent out a message asking appraisers to send me three data points comparing borrower-paid appraisal cost, and average AMC paid assignment fees in October, November 2021 and the same months in 2022 – for SFR assignments. My intent was to provide actual useful AMC-paid fee data compared to what the borrower pays for ‘the appraisal’, without revealing specific fees in any particular location.

Based on this extremely limited data, here’s what was revealed:

Average ‘appraisal cost’ paid by borrowers is $802

Average AMC appraisal fee to the appraiser in 2021: $713, or 11.1% retained by the AMC

Average AMC appraisal fee to the appraiser in 2022: $591, or 26.3% retained by the AMC

This limited survey reveals exactly what appraisers have been reporting across many communication platforms. That being, AMCs are taking far more of the borrower-paid fee this year than last year. As the data shows, the AMC portion has increased more than double from the previous year.

A few of the 40+ appraiser comments:

I solved this AMC issue in my business about 3 years ago. I STOPPED working for AMCs.

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Located in Northern California. We appear to be similar to Southern CA, if we bid over $375, ETA 3 days, we always get “outbid” by lower fees… Sorry, I’m not going to participate in a race to the bottom.

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Most of this doesn’t matter.

Fee Appraisers will be gone in 5 years being relegated to measuring houses, property inspection, and basic condition reporting. If we’re lucky, we’ll get a 2075 for $25 to verify the subject is still there.

The puppet masters don’t like appraisers or the appraisal process, and the AVM’s will take over and Fannie, Freddie, et al, will do to whatever lobbyists and politicians tell them to do. We are on borrowed time, make the most of it.

Maybe the AMC’s will fade away along with the appraiser.

To read more, click here

My comments: Read the 40+ appraiser comments and add your comments. The sample size was small, but at least Dave researched this controversial topic. Fee cycle volatility again: from way up to down.

This never happened before AMCs took over. Direct lender (and mortgage broker) fees had slight declines and increases, whatever happened to the number of originations.

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A $1M Contemporary Home Designed for Musicians Sets the Tempo in Ohio

Excerpts: 2 bed 2.5 bath 6,873sqft 1.97acre lot

The spectacular style of the two-bedroom dwelling was the talk of the town when it was custom-built in 2004 for a married musician couple.

“People call it modern, but I think it’s more a contemporary style with its open spaces, large expanses of windows, and unconventional volumes of space,” says listing agent Pradnya Martz, of Keller Williams.

“The owners were professional musicians. She just retired from teaching the cello, and her late husband was a principal oboist at Oberlin Conservatory of Music. They used to entertain here and hold small concerts on the first level. There are beautiful acoustics in the house, so, of course, the home has already attracted many musicians and artists.”

Located just a few doors down from the Frank Lloyd Wright–designed Weltzheimer Johnson House, the 6,873-square-foot home has an unusual floorplan as well.

To read more and see lots of photos click here 

My comments: I am a musician and converted a one-car garage into a recording studio. Performance and practice space in my house. Wow!!

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How to get a FREE Google Business Profile.

An excellent way to get more appraisal business!

Excerpt: An example of how Google Business Profiles work

Recently, a woman called about getting a 4-unit Alameda property appraised, as one of the owners wants to sell his interest in the family-owned property. She searched the Internet and found many appraiser names in Google Business Profiles.

I was the only one with an Alameda address. I did not work in a large geographic area and was not a big company. She went to my website and found my qualifications.

She called me. Of course, she did not remember how she searched for an appraiser, but she said “the internet.” My Google Business Profile, with a link to my website, is usually close to the top of the Google list.

I charge well above the typical fee for lender appraisals.

After explaining that I had been working in Alameda since 1986, owned Alameda rental property, and had appraised many apartment buildings, I got the order.

I also explained that our rent control made appraisals much more difficult. Using a local Alameda appraiser experienced in apartments was the best option. This article has many practical tips on reviews, geographic areas, Google reviews and many more.

To read more about this topic, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.

If this article helped you understand How Google Business Profile can help you get more appraisal business, it is worth the subscription price!

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How are appraisers handling concessions? January 16, 2023 By Ryan Lundquist

Excerpts: How are appraisers handling concessions to the buyer? Could a seller credit damage the chance of appraising at the purchase contract? These questions weren’t asked a year ago, but welcome to the 2023 housing market.

Question: When a buyer comes in over list price and asks for a concession from the seller, how is that viewed from an appraiser’s mindset?

Answer:

1) No effect on value: The appraiser needs to look to the comps to establish value. Bottom line. The seller can give 3% or more if the lender allows, but this shouldn’t have any bearing on the appraised value theoretically because the proof of value is found in the comps – not the terms of the contract. In other words, if the comps suggest a value at $500,000, it doesn’t matter if the subject is in contract at $500,000 with the seller giving 3% back for closing costs. However, if the only comps at $500,000 are ones with fat credits, and comps without any concessions are coming in closer to $485,000, then that tells us the comps with concessions are maybe closing high due to the concessions…

2) Inflated contract price: All that said, when a property has been on the market for a long time, and it gets into contract at a higher level with a huge credit, it’s only human to wonder whether it’s really worth that amount. It sounds a bit suspect, right? In other words, would buyers really pay the contract price if the seller wasn’t giving a fat concession? This is a viable question, and the appraiser is going to record the full listing history of the subject property and scrutinize the terms of the contract in the appraisal report.

This means the underwriter is going to see everything too. But still, the most weight needs to be given to the comps, so even if the contract price initially looks iffy based on the listing history alone, appraisers have to be careful to be objective about looking to the comps for value rather than the listing history alone. There is no ignoring the listing history though because it might be a clue about value. But then again, maybe there was a problem tenant who wouldn’t allow access, a lack of open houses, or some other reason why the property was on the market for longer than expected…

3) But the seller wants a higher price: A strategy I sometimes see today is to raise the price and give the buyer a credit back for the amount the price was raised. The idea is to help the seller net more and keep the buyer happy with a credit.

To read more and see lots of tables and graphs, click here

My comments: These are excerpts above. Be sure to read Ryan’s full post, plus all the appraiser comments! Written for real estate agents and is very useful for appraisers so we can understand why concessions are made.

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Taos NM Mesa Studio Earthship

4 guests Studio 2 beds 1 bath

Excerpts: Brand new studio Earthship as seen on Off Grid Build! Just search for “Off The Grid Build” to find it. Experience Off Grid living with all the modern amenities in the beautiful high desert mesa just outside Taos, NM.

I built this house myself over 3 years while living in a tent. It was one of the hardest things I have done, but so worth it.

This house is called an Earthship, a totally off grid house that catches its own rain water, generates its own electricity and stays at a steady 72 degrees all year round without the use of any fuel or electricity what-so-ever!

Don’t let the term “Off Grid” fool you, this house has all the modern amenities. fast WiFi, Netflix with a flat screen tv, large refrigerator, large oven/range with a powerful exhaust hood, large bathroom with a luxuriously deep tub and stone all around. There is even a high efficiency washing machine in case you need to do laundry.

To read more and see the photos, click here

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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, go to www.mba.org 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 going up. Some appraisers are very busy, and others have little work. Varies widely around the country.

Mortgage applications increased 27.9 percent from one week earlier

Mortgage applications increased 27.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 13, 2023.

The Market Composite Index, a measure of mortgage loan application volume, increased 27.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 32 percent compared with the previous week. The Refinance Index increased 34 percent from the previous week and was 81 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 25 percent from one week earlier. The unadjusted Purchase Index increased 32 percent compared with the previous week and was 35 percent lower than the same week one year ago.

“Mortgage application activity rebounded strongly in the first full week of January, with both refinance and purchase activity increasing by double-digit percentages compared to last week, which included the New Year’s holiday observance,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Despite these gains, refinance activity remains more than 80% below last year’s pace and purchase volume remains 35% below year-ago levels.”

Added Fratantoni, “Mortgage rates are now at their lowest level since September 2022, and about a percentage point below the peak mortgage rate last fall. As we enter the beginning of the spring buying season, lower mortgage rates and more homes on the market will help affordability for first-time homebuyers.”

The refinance share of mortgage activity increased to 31.2 percent of total applications from 30.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.6 percent of total applications.

The FHA share of total applications decreased to 13.0 percent from 13.4 percent the week prior. The VA share of total applications decreased to 11.8 percent from 13.2 percent the week prior. The USDA share of total applications remained unchanged at 0.6 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($726,200 or less) decreased to 6.23 percent from 6.42 percent, with points decreasing to 0.67 from0.73 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $726,200)decreased to 6.08 percent from 6.09 percent, with points decreasing to 0.4 from 0.66 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.26 percent from 6.39 percent, with points increasing to 1.05 from 1.03 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.58 percent from 5.94 percent, with points decreasing to 0.54 from 0.62 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 5.31 percent from 5.37 percent, with points increasing to 0.74 from 0.72 (including the origination fee) for 80 percent LTV loans. The effective rate decreased 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 Appraiser and Publisher Appraisal Today 1826 Clement Ave. Suite 203 Alameda, CA 94501Phone 510-865-8041 Email  ann@appraisaltoday.com

How to Identify a Residential Complex Property

By: McKissock December 16, 2022

Excerpts: The property to be appraised is atypical

In this case, the property is an outlier, oddball, or not common for the particular area. Of all the characteristics that can make a property complex, physical features are the ones that are most obvious. Some of the key physical features that can make an appraisal assignment complex include:

The form of ownership is atypical

How to Identify a Residential Complex Property

By: McKissock December 16, 2022

Excerpts: The property to be appraised is atypical

In this case, the property is an outlier, oddball, or not common for the particular area. Of all the characteristics that can make a property complex, physical features are the ones that are most obvious. Some of the key physical features that can make an appraisal assignment complex include:

The form of ownership is atypical

In this case, circumstances involving ownership are uncommon or make the appraisal more complex. For example: The owner doesn’t own property rights on a waterfront property.

The market conditions are atypical

In this case, unique market conditions increase the complexity of the appraisal. For example:

The property is located in an area where there are no other sales.

There is no market for the house; no sales are occurring for some reason (e.g., the property is near a nuclear site cleanup).

Note: the link to the complementary post, “How to Pull Comps on a Complex Property,” is included in this blog post.

To read more, click here

My comments: Worth reading with good tips. I published “Tips for dealing with complex residential appraisals” in the November issue, much longer with many more tips and examples.

Appraisal Business Tips 

Humor for Appraisers

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!!

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

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!!

NOTE: Please scroll down to read the other topics in this long blog post on mortgage rate forecast, Humor, adjustments, George Dell, unusual homes, mortgage origination stats, etc.

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Note on video: opens in youtube. Constant Contact does not allow direct links to youtube to open in email newsletters… yet.

12 Days of Appraiser Christmas

Very funny!! Only 3.5 minute long video. Take a Brief Break for Some Appraiser Fun!!

Many thanks to Gary F. Kristensen, SRA, ASA, IFA, AGA at A Quality Appraisals in Portland, Oregon.

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Santa’s House

A winter lover’s paradise nestled on 25 idyllic acres. The property includes Santa’s main living quarters, a community of tiny elf homes, a state-of-the-art toy-making facility, garage with space for an all-weather sleigh and stables that board eight live-in reindeer, plus a bonus stall for red-nosed company.

Follow Santa’s Christmas Eve journey from his North Pole home via the Official NORAD Santa Tracker 

Lot: 25 acres

Home type: Single family

Floor size: 2,500 sqft

Year built: 1822

Last remodel: 2013

Features

Multiple 150 sqft Cottages

Santa’s Toy Workshop

Reindeer Stables

Sleigh Parking Garage

Home value (with no comps, not even close to 30!)

Zestimate $1,154,137

Estimated sales range: $197,266 – $1,154,137

To read more and see lots of photos, click here 

My comments: Lots of fun. Check out the photos and a graph showing price appreciation.

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Lots of details for Residential Non-Lender appraisals!

And more tips.

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If you have any comments or info on any topics, please hit the reply button!! I’m always looking for something new ;>

If you are a paid subscriber and did not get the December 2022 issue emailed on Thursday, December 1, 2022, please email info@appraisaltoday.com, and we will send it to you!! Or hit the reply button. Be sure to put in a comment requesting it.

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Surprising Things That Can Decrease Property Value

Excerpts: #3 Unappealing home exterior

The “curb appeal” of a house is the first impression it gives to passers-by. Therefore, while preparing for a home appraisal it’s important to work on improving your home’s exterior. Not only that this will help you boost the value of your home but it will also help you attract buyers and sell it quicker.

#5 A home that’s too personalized

Potential purchasers are keenly aware of the work that will need to be done on a home during a viewing. Removing wacky wallpaper, painting over strange hues, and changing unconventional fittings are at the top of their priority lists. If you’re going to go for an unusual look, make it easy to undo before putting your home on the market.

To read more, click here

My comments: Written for homeowners, but useful reminders for appraisers. I don’t know if they all decrease the value in a particular location or market, but they are red flags.

I have done many relocation appraisals, where you advise the relocation company about the condition and recommend fix-ups, whenever possible, such as cluttered homes and new interior and exterior paint.

I often see myself as a neutral advisor on fix-ups and other changes before selling. This situation is very common in estate appraisals, where the home needs work before putting on the market. Sometimes they don’t trust real estate agents.

I always tell them that the value will increase much more than the fix-up cost. Also, the home will sell quicker. If they don’t have any money, I tell them to clean it so they can eat off the floors.

I let the owners, who may be selling the property, know about marketability issues. Not fixing these problems can affect the final sales price. In a slow market, of course, this can become more of a problem. In my market, most homes are listed and staged. I tell them the ideal is to make your home look like a model home in a new subdivision.

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393-Acre Property in Fayetteville, AR, Comes With a 1.2-Mile Racetrack

Excerpts: “It’s for racing real cars. It runs right by the house, so you can do events and watch the race from down below or the top deck,” says listing agent Daniel Short, with True North Realty Group.

The 7,764-square-foot mansion, 30,000 square feet of metal outbuildings, and 393 acres are listed for $6.7 million. But the list price may change as there is a sale pending for some of the flood plain land for watershed conservation.

Short says the remaining land could be further subdivided.

Several outbuildings have everything a car enthusiast needs.

“He’s got car lifts, a paint booth, a wash bay, a place to do tire work, and [a location to] store racing fuel. He can work on every car he has,” Short says. “He’s also got the largest privately owned solar complex in Northwest Arkansas.” That means no power bills.

To read more and see many interesting photos, click here

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Is 30 comps enough?

By George Dell, MAI, SRA

Excerpts: Historical appraisal practice, as passed on from trainer to trainee, in the outdated master/apprentice model that imposed strong inviolable dictates. For residential forms, the magic number was three, sometimes up to five or six. Three and a subject column fit perfectly on a 8 1/2 x 14 paper! Wonderful.

USPAP requirements have an internal self-contradiction about how many comps are required for the “believability” measure. On one hand, the requirement for “an acceptable scope of work” endorses the stated historical practices. (The standards require us to do what our peers historically do — right or wrong.) On the other hand, Rule 1-4 states the appraiser must use “all information necessary ” and “such comparable sales data as are available.” Which is it? All competitive sales, or just 4 or 5?

Sometimes the ideal data set size will be 3, or 13, or 33. Only by chance will it be 30, or any other particular number. If appraisers are required to use any arbitrary number, the result will be less than optimal. Modern valuation progress requires three things:  1) a clear definition of “what is a comp?” 2) Appraiser training to reflect this simple data analysis rule; and 3) standards and user requirements (such as the GSE’s) that require this basic data science issue to be evaluated in every appraisal.

To read what more, click here

My comments: George continues on his long-time quest to really modernize residential appraisals, not just designing another type of online report or speeding up the appraisal process with AVMs and desktops. Don Quixote?

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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, go to www.mba.org 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 going up. Some appraisers are very busy, and others have little work. Varies widely around the country.

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Mortgage applications increased 0.9 percent from one week earlier

Mortgage applications increased 0.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 16, 2022.

The Market Composite Index, a measure of mortgage loan application volume, increased 0.9 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 increased 6 percent from the previous week and was 85 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 0.1 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 36 percent lower than the same week one year ago.

“The Federal Reserve raised its short-term rate target last week, but longer-term rates, including mortgage rates, declined for the week, with the 30-year conforming rate reaching 6.34 percent – its lowest level since September,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Refinance application volume increased slightly in response but was still about 85 percent below year-ago levels. This is a particularly slow time of year for homebuying, so it is not surprising that purchase applications did not move much in response to lower mortgage rates.”

Added Fratantoni: “The latest data on the housing market show that homebuilders are pulling back the pace of new construction in response to low levels of traffic, and we expect this weakness in demand will persist in 2023, as the U.S. is likely to enter a recession. However, if mortgage rates continue to trend down, as we are forecasting, more buyers are likely to return to the market later in the year, as affordability improves with both lower rates and slower home-price growth.”

The refinance share of mortgage activity increased to 31.3 percent of total applications from 29.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.5 percent of total applications.

The FHA share of total applications decreased to 13.0 percent from 13.1 percent the week prior. The VA share of total applications increased to 11.9 percent from 11.5 percent the week prior. The USDA share of total applications remained unchanged at 0.6 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 6.34 percent from 6.42 percent, with points decreasing to 0.59 from0.64 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200)decreased to 5.97 percent from 6.14 percent, with points increasing to 0.53 from 0.42 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.35 percent from 6.40 percent, with points decreasing to 0.99 from 1.03 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.81 percent from 5.92 percent, with points decreasing to 0.53 from 0.54 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 5.43 percent from 5.58 percent, with points increasing to 0.95 from 0.80 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

Please Note:

MBA Offices will be closed Monday, December 26, 2022 and will reopen on Tuesday, January 3, 2023.  Due to the holiday, the results for weeks ending December 23, 2022 and December 30, 2022 will both be released on January 4, 2023.

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.

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

Appraiser and Publisher Appraisal Today

1826 Clement Ave. Suite 203 Alameda, CA 94501

Phone 510-865-8041

Email  ann@appraisaltoday.com 

www.appraisaltoday.com

Industry Insider Insight on Risk and Modernization

Excerpts: The Collateral Risk Network (CRN) met in Sarasota on December 6th to discuss a variety of issues ranging from appraisal turn times to Fannie Mae’s economic outlook for 2023. Bill Rayburn gave a rousing and lively explanation of exactly what quality means in valuation at a recent meeting. Lenders want a compliant document that allows the loan package to be sold as quickly as possible, while investors want an appraisal that allows for

Industry Insider Insight on Risk and Modernization

Excerpts: The Collateral Risk Network (CRN) met in Sarasota on December 6th to discuss a variety of issues ranging from appraisal turn times to Fannie Mae’s economic outlook for 2023. Bill Rayburn gave a rousing and lively explanation of exactly what quality means in valuation at a recent meeting. Lenders want a compliant document that allows the loan package to be sold as quickly as possible, while investors want an appraisal that allows for securitization or resale to another downstream buyer.

Appraisers were encouraged to provide convenience as one aspect of quality. His figures show there is a holding cost of $200 per day on an unclosed loan and this hinges on the appraisal which is the last thing in the critical path to closing. He suggested we redefine quality to include a time element.

Joe Minnich, a condo risk consultant, spoke on how loans secured by an individual unit in a condominium project have greater risk than found in typical SFR lending. Lenders must address the various layers of risk to ensure that the loan is of saleable quality and the likelihood the borrower can/will repay the loan.

To read more, click here

My comments: Bill Rayburn, Chairman, and CEO at mTrade, is an excellent speaker and very savvy. I have known him for many years. FYI, CRN (Collateral Risk Network) was set up for AMCs and lenders. It was “closed” to appraisers for a while but is open now. Worth attending.

Fannie New Appraisal Form Modernization

Appraisal Business Tips 

Humor for Appraisers

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!!

NOTE: Please scroll down to read the other topics in this long blog post on Fannie December newsletter, estate appraisals real estate market, unusual homes, mortgage origination stats, etc.

Click here to subscribe to our FREE weekly appraiser email newsletter and get the latest appraisal news!!

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Danish Home Designed to Showcase Its Owner’s Vintage Car Collection

Excerpts: To conceive a home that was both open to the terrain and private, Ingels and his team began with a simple idea: arranging the house into a single long building, with cars at one end and living spaces at the other. “Then we took that logic and wrapped it around the top of the hill, creating a ribbon, or loop, that overlaps itself as it climbs the terrain,” he notes.

Cars enter the home at ground level, pulling into a gallery-like expanse that accommodates as many as eight vehicles. From there, rooms snake upward, arranged in a linear plan along a curved, gently sloping corridor that is illuminated by skylights but otherwise windowless. “The hallway has this infinite feeling,” says Ingels. “From many angles, you can’t see the end in either direction.”

To read lots more and see very interesting photos, click here 

My comments: Wow, And I’m not a “car person”!! I have sometimes seen house garages with a partially disassembled old car that the husband always wanted in high school and has been working on for many years.

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Fannie December 22 Update – Facts, not Feelings

Topics:

Improve appraisal commentary with facts, not feelings

Excerpt: One exception to the use of words and phrases that are otherwise considered subjective is when the word is part of a property noun, such as the name of a place, street name, city, or a legal description of the property. For example, “good” and “boring” are generally unacceptable subjective descriptions, but if the property is located on Good Street in Dallas, Texas, or in the city of Boring, Oregon, then their usage is objective and acceptable as part of the place names.

We recently scanned millions of appraisals from 2021 – 2022 for subjective terms. After removing place names and similar exceptions, we found that three of the most common subjective phrases used by appraisers are: desirable location, desirable

neighborhood, and good neighborhood. Whether a location is “desirable” or not is a subjective idea…

To download the PDF and read more, click here

My comments: Focuses on desktop appraisals. Useful tips on facts, not feelings. This is a good reminder for all of us. Be sure your name does not appear in the newspapers because you “discriminated” against Black borrowers.

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Appraisals for estates and trusts – the most popular non-lender appraisals, Part 2

Turn times

Turn times are typically relatively long for date of death appraisals, except when the trustee must file a tax return or a 706 form for the date of death soon.

Estate appraisals are relatively easy to fit in with lender appraisals if you are busy. I quote turn times much longer than for lenders and seldom have any issues. Mine range from 2 to 6 weeks, depending on how busy I am. Large estates can take months.

If you are doing current value, such as for a sale to a tenant or relative, they usually want it sooner.

Value pressure

I rarely have value pressures, even with estates subject to the federal estate tax.

However, I prefer to find out if there are multiple beneficiaries and where they live so I can put in more detailed market information.

I make it very clear that my values are not high or low. They are the most probable values.

There are sometimes questions from beneficiaries about retrospective vs. current values if prices change. This typically happens when the current sales price differs from my retrospective value.

To read lots more about this topic, plus 2+ years of previous issues, subscribe to the paid Appraisal Today.

If this article helped you understand Estate/Trust appraisals, it is worth the subscription price!

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If you have any comments or info on any topics, please hit the reply button!! I’m always looking for something new ;>

If you are a paid subscriber and did not get the December 2022 issue emailed on Thursday, December 1, 2022, please email info@appraisaltoday.com, and we will send it to you!! Or hit the reply button. Be sure to put in a comment requesting it.

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U.S. Foreclosure Completions Increase Annually By 64 Percent In November 2022

December 8, 2022

Foreclosure Activity Remains Up 57 Percent from Last Year, and Foreclosure Starts Increase Annually by 98 Percent; But Both Measures Down from October 2022.

Topics:

Highest foreclosure rates remain in Illinois, Delaware, and New Jersey

Greatest number of foreclosure starts still in California, Texas, and Florida

Excerpt: December 8, 2022 — ATTOM, a leading curator of real estate data nationwide for land and property data, today released its November 2022 U.S. Foreclosure Market Report, which shows there were a total of 30,677 U.S. properties with foreclosure filings — default notices, scheduled auctions or bank repossessions – up 57 percent from a year ago, but down 5 percent from the prior month.

“We may be at or near a peak level of foreclosure activity for 2022,” said Rick Sharga, executive vice president of market intelligence at ATTOM. “While foreclosure starts and foreclosure completions both increased compared to last year’s artificially low levels, they declined from last month, and lenders often put a moratorium on foreclosures during the holiday season.”

To read more, click here

My comments: Most of us have been through at least one foreclosure market. Don’t miss changes in your market! Keep close track of local foreclosure data, increases in expired listings, few pending sales vs. number of listings, price drops, re-listings, etc.

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How much have home prices gone down?

December 14, 2022

By Ryan Lundquist

Excerpt:

Buyers went from FOMO to FOGS

First, here’s a clever way to describe some buyers right now. Buyers went from the Fear of Missing Out (FOMO) to the Fear of Getting Stuck (FOGS). This obviously doesn’t describe everyone because lots of buyers simply cannot afford the market, so stepping back isn’t just about fear. But this concept resonated with me since some buyers have been really concerned about buying at a higher price only to see prices go down later.

This concept came from David Osborn, and I made a meme out of it. And now let’s see what happens at the Fed meeting today. So many buyers are hungry for housing, but affordability has been the main roadblock. As I keep saying, we’ll get more buyers back as affordability improves. Bottom line.

Ryan’s analysis of May vs. Today in his market

How much do I weigh compared to one year ago? And how much do I weigh since the spring? Those could be two different answers, and that’s how real estate stats are working right now. Two very distinct numbers.

Last year vs. May 2022

When looking at the image below, do you see how there isn’t much change from one year ago? But there’s been a giant change from May. As I said last week, prices have dipped three times faster than the normal rate this year. But if we only focus on last year, price drops look modest.

Friends, I had this conversation at least a dozen times this past week when sharing year-over-year stats, and lots of smart people were thinking prices weren’t down that much. This is an easy mistake to make.

It’s key to get into the habit of looking at year-over-year stats AND recent stats. I think it’s been so long in real estate since we’ve thought about declining prices, so there is a learning curve to get back into the rhythm.

Unfortunately, some people will focus on year-over-year stats, and they’re going to walk away with an incomplete picture or even perpetuate a false narrative.

To read more plus read the many appraiser comments, click here

My comments: What is happening in your market? See what Ryan does in his market. He has lots of advice on what to watch, plus discussion in the comments. Don’t miss a change in your market. Make correct market conditions adjustments! I quit making line item adjustments on the appraisal forms a while ago, but I always make market conditions adjustments when needed. Don’t let Fannie come after you on a loan buy back!!

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How Do You Wedge a Condo Into a Tiny Site? Work the Angles

The developer wanted to fit multiple units on a small, oddly shaped parcel of land in a neighborhood of traditional homes in British Columbia.

Excerpt: Vancouver architect D’Arcy Jones had never designed a multifamily project before, so when the opportunity to build a small condo came up, he was willing to tell a tiny fib to land the gig. The developers of the oddly shaped site in Victoria, British Columbia, thought it was too irregular to support much housing, even though it was zoned for it; they had their fingers crossed for four units, Jones says. So he told them he could fit five.

“It was like a piece of pizza,” he says, “a triangle that no one else wanted to buy.”

In the end, the architects beat even their own optimistic projections, delivering six family-sized modernist condos for this in-fill development…

To read the very interesting descriptions and comments, click here

My comments: Very interesting photos and images, similar to the one above. Discusses neighborhood opposition to multifamily, interesting layouts for the triangular units, parking, room layouts, and more topics.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, go to www.mba.orgNote: 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 going up. Some appraisers are very busy, and others have little work. Varies widely around the country.

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Mortgage applications increased 3.2 percent from one week earlier

Mortgage applications increased 3.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 9, 2022.

The Market Composite Index, a measure of mortgage loan application volume, increased 3.2 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 0.4 percent compared with the previous week. The Refinance Index increased 3 percent from the previous week and was 85 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 4 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 38 percent lower than the same week one year ago.

“Mortgage rates increased slightly after a month of declines, as financial markets reacted to mixed signals regarding inflation and the Federal Reserve’s next policy moves. The 30-year fixed rate inched to 6.42 percent, which is still close to the lowest rate in a month,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Overall applications increased, driven by increases in purchase and refinance activity. However, with rates more than three percentage points higher than a year ago, both purchase and refinance applications are still well behind last year’s pace.”

Added Kan, “The ongoing moderation in home-price growth, along with further declines in mortgage rates, may encourage more buyers to return to the market in the coming months.”

The refinance share of mortgage activity increased to 29.4 percent of total applications from 28.7 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 7.7 percent of total applications.

The FHA share of total applications decreased to 13.1 percent from 13.7 percent the week prior. The VA share of total applications increased to 11.5 percent from 11.4 percent the week prior. The USDA share of total applications remained unchanged at 0.6 percent from the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) increased to 6.42 percent from 6.41 percent, with points increasing to 0.64 from0.63 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate remained unchanged from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200)increased to 6.14 percent from 6.08 percent, with points decreasing to 0.42 from 0.50 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.40 percent from 6.39 percent, with points increasing to 1.03 from 0.93 (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 5.92 percent from 5.84 percent, with points decreasing to 0.54 from 0.55 (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 decreased to 5.58 percent from 5.59 percent, with points decreasing to 0.80 from 0.91 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

Please Note:

MBA Offices will be closed Monday, December 26, 2022 and will reopen on Tuesday, January 3, 2023.  Due to the holiday, the results for weeks ending December 23, 2022 and December 30, 2022 will both be released on January 4, 2023.

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.

==============================================

Ann O’Rourke, MAI, SRA, MBA

Appraiser and Publisher Appraisal Today

1826 Clement Ave. Suite 203 Alameda, CA 94501

Phone 510-865-8041

Email  ann@appraisaltoday.com

www.appraisaltoday.com

How to Reduce Appraisal Revision Requests

By Clear Capital November 14, 2022

Excerpts:

To cut down on appraisal revision requests, it is important to keep these best practices in mind:

Communicate in a timely manner

Address the request thoroughly and professionally. Add additional commentary where appropriate.

Ask questions. If you disagree with the request for appraisal submissions or have concerns or need clarification, please

How to Reduce Appraisal Revision Requests

By Clear Capital November 14, 2022

Excerpts:

To cut down on appraisal revision requests, it is important to keep these best practices in mind:

Communicate in a timely manner

Address the request thoroughly and professionally. Add additional commentary where appropriate.

Ask questions. If you disagree with the request for appraisal submissions or have concerns or need clarification, please reach out for clarification.

1. Explain ‘How’, not ‘Why’ in the appraisal report

The most common frustrations arise when the appraiser focuses more on the type of adjustments made while the reader would look for the ‘how’ in the appraisal report. For example, if a positive or negative adjustment was applied in the report, the reader wants to know how the adjustment was determined.

“How did you determine that the subject comparable was inferior or superior in condition? Don’t leave the ‘how’ part out while applying adjustments. Be sure to address those questions; it will certainly help you in the long run.” says Ken Folven, Senior Director, Appraisal Quality Assurance at Clear Capital

2. Reduce lengthy commentary

In some cases, appraisers provide lengthy boilerplate commentary in an attempt to avoid a revision request. This strategy often backfires because parties involved in the lending process cannot find the specific information they are looking for in the report. Inconsistent commentary can result in common requests for revision.

Prior to submission, read the letter of engagement in detail, which highlights the customer-specific information, and make sure to include all required information in your report. Organize your commentary and explain your comparable selection process briefly.

“I always recommend organizing commentary by adjustment rather than by comparable and make it a habit to review the pre-delivery rules,” says Khan.

Derek Mitchell, a California-based Senior Appraiser at Clear Capital, has a different approach: “I use a lot of characteristic-based comments as opposed to comparable-based comments because it cuts down on the amount of writing that I have to do and the amount of reading the reviewer has to do,” Mitchell says. “It tends to get redundant when you’re just talking about different comparables but the same characteristics.”

In addition, staying up-to-date with Uniform Standards of Professional Appraisal Practice (USPAP), Federal Housing Administration (FHA), and GSE guidelines and industry requirements also goes a long way in drafting error-free reports that would otherwise create unnecessary revision requests.

To read more, click here

My comments: Good practical tips. We all hate revisions unless maybe it was because we forgot to put the value in. I did this sometimes in appraisals for a local bank ;> Your clients hate them also. They take appraisers too much time and can sometimes make you very upset, which interrupts your workflow.

What Causes Appraisal Revisions?

Appraisal Business Tips 

Humor for Appraisers

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To read more of this long blog post with many topics, click Read More Below!!

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

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$2.5M Medieval Castle with Drawbridge & Secret Rooms Relists in Oakland Township, Michigan

Excerpts:

Built 1990 | 6,106 Sq. Ft. | 5 Beds | 5.5+ Baths | 6.25 Acres

Built over a period of 6 years and standing 60 feet tall

The frame is built with 60 tons of steel and construction took over 6 years utilizing artisans from all over the world. The castle is 60 feet tall, or taller than a 4 story building. It features a moat, waterfall, drawbridge, portcullis, 26 rooms, elevator, 5 fireplaces, 6 new furnaces, 6 new A/C units, secret rooms, hidden doors, hidden passageways, hidden staircase, wine cellar, Tudor style pub, and a few more surprises.

The castle cost more than $10 million to build and has a laundry list of recent upgrades including 6 new high efficiency furnaces + air conditioners, new humidifiers, new boiler, water storage tank, the elevator was serviced and certified in 2022, $100,000 in window/door upgrades, and about $20,000 in electrical updates.

To see read more and see lots of photos, click here 

My comments: Comps??? Over improvement? Go back in time, go to another city, refer to another appraiser who likes challenges?

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What Does Seat Time Serve? What purpose does “waiting” serve (a.k.a. known as “seat time”)? The States Need To Rethink Time Requirements For Online Exams

By Jonathan Miller, December 5, 2022

Excerpts: It was a rainy weekend, so I thought I’d take online classes to meet my continuing education requirements. I’ve always been a fast test taker, often trying to be the first person in the classroom to bring my answers to the proctor first. I’m one of those annoying people, but if I pass the test, should I be penalized for taking the test fast? For my first appraisal licensing exam years ago, I finished it in around 40 minutes, but we were given 2 hours to take it. Should I have been forced to sit at my desk and wait until the two hours were up? New York State didn’t think so.

Yet New York State thinks so for taking online classes. I took a three-hour course in 52 minutes and am not allowed to take the final exam yet. The following dialog box says it all.

This is a NY state requirement and common across the US. It is time for the 55 states and territories to rethink licensing requirements. A time calculation should not be part of math if a student takes a class and can pass the test on the materials presented. Since there is zero empirical evidence that those additional 98 minutes will make me understand the course materials any better, taking away 98 minutes of my potential livelihood is wrong.

To read more, click here

My comments: This is from a recent post by Jonathan Miller in his Housing Notes. Subscribe at https://millersamuel.com. I have subscribed for many years.

When I wrote about the new ANSI requirements earlier this year, I needed to take some ANSI CE classes and review them. I had not taken an online class with tests for many years. I finally gave up. It took me hours and hours to complete sections to move to the next section of the class. I finally asked the providers to give me information on the class conte so thatso I could write about it. I will not even try to take one of these classes again!

I asked around about what had happened. I had never seen so many short tests. One explanation was that “someone” complained because students completed USPAP too quickly.

When I started live teaching CE classes soon after licensing started, I did not use any tests. Not required by California. As a teacher, I really hate tests. You often need to teach to the test so that most students pass. When I did my national conferences from 2001 to 2006 there were no tests.

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How to have a higher regular income in retirement. Delay signing up for Social Security until you are 70 years old

I speak with many appraisers who have retired or will be retiring soon. I always tell them I get $4,125.80 monthly in Social Security starting in December 2022. I am 79 years old. They are always surprised by how much money I get compared to their Social Security income. They started taking Social Security earlier than age 70. I plan to live into my 90s and need all the money I can get then.

Only 7% of women and 5% of men started at age 70 or older. 31% of women and 27% of men signed up for Social Security at age 62 in 2018, down from around 54% of women and 50% of men in 2005, according to Social Security Administration data.

For example, if you start receiving retirement benefits at age 67 instead of age 66, depending on the year you were born, you’ll get 108 percent of the monthly benefit because you delayed getting benefits for 12 months. At 70, you’ll get 132 percent of the monthly benefit because you delayed getting benefits for 48 months.

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How Grocery Store Locations Impact Home Values

By Attom Nov 22, 2022

Excerpts: While homes near a Trader Joe’s realized an average 5-year home price appreciation of 49 percent, and homes near a Whole Foods saw an average appreciation of 45 percent, ALDI had a slight advantage at 58 percent.

However, not only does Trader Joe’s lead the pack for homeowners with an average home value at $987,923, but it also takes the lead in home equity with homeowners earning an average of 50 percent ($520,842) equity, compared to Whole Foods at 45 percent ($433,311) and ALDI at 38 percent ($132,643). The average value for homes near a Whole Foods is $891,416, and $321,116 for homes near an ALDI.

For this analysis ATTOM looked at current average home values, 5-year home price appreciation for YTD (Q1-Q3) 2022 vs. YTD (Q1-Q3) 2017, current average home equity, home seller profits, and home flipping rates in U.S. zip codes with a least one Whole Foods store, one Trader Joe’s store and one ALDI store. Grocery store locations are from the USDA.

To see the infographics and more details on the methodology, click here

For more interesting info, read “Wait, Trader Joe was a real guy?” published May 7, 2022 by CNN Business. To read the article, click here

My comments: Trader Joe’s opened a store in my small town, somewhat distant from the freeway, in a shopping center next to a large Safeway. I don’t remember when it opened, but I heard it was one of their top selling stores. Nearby cities were trying to get them to come. During the early days of the pandemic, long lines were waiting to shop, plus special “senior” hours.

We don’t have a Whole Foods store (aka “Whole Paycheck” for the relatively high prices), but we would really like one.

The original Trader Joe’s opened in Pasadena, California. It opened in 1967. Amazon bought Whole Foods five years ago for $13.7 billion. Who knows what Amazon will do?

By the late 1980s, the chain had expanded into Northern California, and in 1993 the first Arizona location opened. 1995 brought expansion into the Pacific Northwest, and in 1996, the first two East Coast locations opened outside Boston.

By 2020, Trader Joe’s had more than 530 stores and an estimated $16.5 billion in sales, according to the latest data available from Supermarket News.

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Affordability Drives Value: Insights from a Seasoned Appraiser

By Steve Steven W. Vehmeier, December 6, 2022

Excerpts: It can be said that housing prices determine affordability, but it is also true that affordability can drive prices, and prices in turn can drive value.

Due to rising interest rates, many potential home buyers are currently unable to qualify to buy the properties they want. Some have been pushed out of the market entirely. After speaking with two individuals in the mortgage business recently, I discovered that they suddenly have a lot of free time since the number of mortgage applicants has declined significantly. At the same time, I’m seeing some listing prices being reduced, and the number of days on market is gradually increasing. All of these are signs which indicate a gap in affordability.

Lack of affordability impacts the market

As interest rates and inflation rise, but incomes do not rise at the same level, this could very well trigger a market correction. I’m reading lots of predictions from people in high places in the real estate and lending worlds saying that the correction is underway, and it’s all about affordability.

Topics include:

To read more, click here

My comments: Worth reading with some interesting comments. For example, “On the first day of class, I often tell pre-licensing students, “Appraisers don’t create value; they just read the tea leaves in the cup.” I love that quote!

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Former School in Latah, WA Listed for $699,000

8,700-square-foot home, 12-foot-high ceilings, 5 bedrooms and 6 bathrooms. 1.4 acre site. On the market since March, 2022.

Excerpts: The building dates to 1908, and it served students for 50 years. The rural schoolhouse has been on the National Register of Historic Places since 2002. It sat vacant for about 60 years before it went through its conversion.

The main schoolhouse has three levels: a basement; a living level with the kitchen; and an upstairs space with bedrooms, a library, and some unfinished former classrooms—one of which still sports its original wood floors and a 1908 chalkboard.

To read more, watch the short video, and see lots of interesting interior photos, click here

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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, go to www.mba.org

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 going up and down. Some appraisers are very busy, and others have little work. Varies widely around the country.

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Mortgage applications decreased 1.9 percent from one week earlier

Mortgage applications decreased 1.9 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 2, 2022. Last week’s results include an adjustment for the observance of the Thanksgiving holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.9 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 36 percent compared with the previous week. The Refinance Index increased 5 percent from the previous week and was 86 percent lower than the same week one year ago. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier. The unadjusted Purchase Index increased 31 percent compared with the previous week and was 40 percent lower than the same week one year ago.

“Mortgage applications decreased 2 percent compared to the Thanksgiving holiday-adjusted results from the previous week, even as mortgage rates continued to trend lower. Rates decreased for most loan products, with the 30-year fixed declining 8 basis points to 6.41 percent after reaching 7.16 percent in October,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The 30-year fixed rate was 73 basis points lower than a month ago – but was still more than three percentage points higher than in December 2021. Additionally, the pace of refinancing remained around 80 percent lower than a year ago.”

Added Kan, “Purchase activity slowed last week, with a drop in conventional purchase applications partially offset by an increase in FHA and USDA loan applications. The average loan size for purchase applications decreased to $387,300 – its lowest level since January 2021. The decrease was consistent with slightly stronger government applications and a rapidly cooling home-price environment.”

The refinance share of mortgage activity increased to 28.7 percent of total applications from 26.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.6 percent of total applications.

The FHA share of total applications increased to 13.7 percent from 12.2 percent the week prior. The VA share of total applications increased to 11.4 percent from 11.2 percent the week prior. The USDA share of total applications increased to 0.6 percent from 0.5 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($647,200 or less) decreased to 6.41 percent from 6.49 percent, with points decreasing to 0.63 from0.68 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $647,200)decreased to 6.08 percent from 6.35 percent, with points decreasing to 0.5 from 0.61 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.39 percent from 6.57 percent, with points decreasing to 0.93 from 1.14 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.84 percent from 6.02 percent, with points decreasing to 0.55 from 0.69 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs increased to 5.59 percent from 5.48 percent, with points increasing to 0.91 from 0.89 (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.Ann

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Ann O’Rourke, MAI, SRA, MBA

Appraiser and Publisher Appraisal Today

1826 Clement Ave. Suite 203 Alameda, CA 94501

Phone 510-865-8041

Email  ann@appraisaltoday.com

www.appraisaltoday.com