This family purchased their home six years ago for $325,000 and are currently asking $225,000. They recently had the home appraised for $190,000. ABC called in Barbara Corcoran, real estate expert (and on the panel of TV's "Shark Tank") for her advice. ABC then called in an "Appraisal Expert" to help this family raise their $190,000 appraised value by $24,000 in just 48-hours!
Should an appraiser really have to be "Brave" just to do their job? No! But that's sort of what it comes down to when any misstep high or low can result in retaliation by an AMC, Lender, or Regulator.
The way "appreciating" markets have always worked in my market is that values "creep up" in small increments. A few thousand dollars or a 1% or 2% percent increase in new home values per month or quarter. As soon as sales AND listings started creeping up . . .appraisals would reflect that trend.
However, when builders JUMP prices up tens of thousands of $$$$$ or 10% -15% without any support or change in existing stock, is it any wonder that appraisers and underwriters flinch?
The big question is my mind is WHY we continue to expect appraisers to reconcile to a "Point Value" instead of a "Range of Value" like appraisers in any other field?
"Appraisals seem to be a hot topic as of late, and given the fact that we happen to have a gentleman that loves to talk about appraisals, we figured it would make a good Watch-It Wednesday."
"Dan Friedberg is back with another insightful three minutes of appraisal advice. Take a look at the video to see
what should be fixed up before an appraiser swings by,
what appraisers are not necessarily interested in seeing, as well as
where appraisers get their information."
"This is guaranteed to be the most informative three minutes of your day.
Informative? Maybe . . . but are all tips correct?
Here are a couple of quotes:
"FHA appraisals are much more strict . . . .If you have things like a missing handrail, a crack in the sidwalk, you know uhhhh . . .if the carpet is screwed up, or if there's water damage . . . that's ALWAYS going to need to be fixed on an FHA.They're really nit pickey about stuff."
On landscaping that cost $15,000. . . . "While it may [increase value] in terms of a "sale", when it comes to an appraiser that makes no difference.All they're looking at is the square footage of the home, the way that it's built, the amount of rooms that it has, in comparison to homes that have sold in the neighborhood.""So they really don't care about how nice your appliances are, or the nice fixtures that you have, or the paint, or the Man Cave in the basement, and things like that.It's really just square footage and recent sales."
Let us know YOUR thoughts after watching the video!
UPDATE!! UPDATE!! UPDATE!!
From Eric Mally of QuickenLoans - 2/15/2012:
Hi Brian. The other day, you posted a video from Quicken Loans with less-than-perfect information regarding the appraisal process. That video was shot with one of our bankers, not a certified appraiser.
We have since reshot the video with a certified general appraiser with 25+ years of experience. We would appreciate if you would please post this video as well, seeing that it is more informative and correct.
Fannie Mae has posted their own tutorial on the Uniform Appraisal Dataset. You can find it at this website. On good authority Fannie Mae is having a Q & A session on May 19, 2011 about the tutorial. It appears you must take the tutorial to be allowed to participate in the Q & A session. Source: CCAP
Prudential Douglas Elliman Real Estate Vice Chairman Dolly Lenz discusses why appraisers' low-ball offers are hampering the growth of the housing market with David Asman on Fox - America's Nightly Scoreboard.
Watch this video and let us (and them) know what you think of this story!!?
Dolly says . . "Nobody wants things low and slow." referring to appraisers' impact on the real estate transaction.
When asked what could be done to fix the problems she says:
"I think for one, they should have to provide comparable sales. So an appraiser saying this property is worth $300,000 . . .you have to provide numbers why. Not when "requested". Should "have to provide"."
Where in the world has Dolly been for the past 40-50 years?! Does she REALLY think that appraisers aren't providing support for their values?
FUSION, a low end USPAP compliant appraisal and report
will be posted on the site very soon. It is free, but it utilizes updated
verions of the Regression+ and the USL Documenter for it to run. If you
purchased either of these products in the past year the updates are free. If
you purchased over a year ago the update will only be $25.00 plus S&H.
Also, an updated Total Solution will posted the week of August 16th.
This will meet the recent FANNIE MAE required changes. This most recent Fannie
requirement is better than using the cumulative listing count, but
statistically has some issues. One sample from each period for the number of
listings may produce unreliable results. The Total Solution for the 1004mc form
is now a FREE download. I guess you will just have buy something else (ha ha).
Two day seminar (14 hours with test, 12 hours without test)
Prerequisites: This seminar requires that attendees have basic (beginner) knowledge of MS Excel®.
At the end of this seminar participants will be able to:
Understand how “least squares, straight-line” regression analysis works.
Demonstrate an understanding of relevant statistical terminology.
Understand how regression analysis relates to appraising and where traditional appraisal techniques and regression analysis overlap.
Prepare data for analysis by “scrubbing” it in an Excel spreadsheet.
Perform regression analysis of sales data to form an opinion of market value and extract adjustment values.
o Utilizing the “Stepwise” method
o Utilizing “Dummy Fields”
o And, much more.
·
Recognize the weakness (unreliability) of trending one property component at a time (such as sales price or sales price per square foot).
Able to understand the underlying “assumptions” of regression and how to test that these assumptions have not been violated.
Able to understand the reliability of the regression analysis results.
· Decide if adding regression analysis to your appraisal practice is right for you.
If you are a user of appraisals; determine if regression analysis can meet your valuation needs.
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