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Appraiser Expertise Question

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bororke

Freshman Member
Joined
Jun 14, 2013
Professional Status
General Public
State
Florida
I am an UW reviewing appraisals for a large bank. As all of you are probably aware, FNMA is now giving full indemnification for appraisals that score 2.5 or less. There are two areas that drive up the score if they do not match what the FNMA collateral UW thinks they should be:

1) The condition rating- obviously it looks at previous reports for this property and age and if the rating is not what they think it should be it drives up the score. These variances are usually explained in the description of the condition on page 1.

2) The adjustments is the other big area and this is the area that I have a question on. For instance, in California an appraiser puts the adjustment for site and provides logic but the Collateral UW will be significantly different and this drives the score way up.

As an appraiser are the adjustments for these two areas ( condition rating from C3 to C4 or a site adjustment) driven by standard local market adjustments or paired sales analysis (extracted from subjects market place) for each loan? I am just wondering how FNMA is determining for example a site adjustment in LA county vs. what is being offered by the appraiser. In the example I am looking at the appraiser is reflecting a $10 sf adjustment and the FNMA model is $50sf in LA county? As an appraiser would you want to see this brought to your attention when these large variances occur if you have already explained your logic?
 
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bororke

Freshman Member
Joined
Jun 14, 2013
Professional Status
General Public
State
Florida
I am an UW reviewing appraisals for a large bank. As all of you are probably aware, FNMA is now giving full indemnification for appraisals that score 2.5 or less. There are two areas that drive up the score if they do not match what the FNMA collateral UW thinks they should be:

1) The condition rating- obviously it looks at previous reports for this property and age and if the rating is not what they think it should be it drives up the score. These variances are usually explained in the description of the condition on page 1.

2) The adjustments is the other big area and this is the area that I have a question on. For instance, in California an appraiser puts the adjustment for site and provides logic but the Collateral UW will be significantly different and this drives the score way up.

As an appraiser are the adjustments for these two areas ( condition rating from C3 to C4 or a site adjustment) driven by standard local market adjustments or paired sales analysis (extracted from subjects market place) for each loan? I am just wondering how FNMA is determining for example a site adjustment in LA county vs. what is being offered by the appraiser. In the example I am looking at the appraiser is reflecting a $10 sf adjustment and the FNMA model is $50sf in LA county? As an appraiser would you want to see this brought to your attention when these large variances occur if you have already explained your logic?

Can anyone tell me what is the best book for an UW to read to better understand the process of appraising properties? I am looking for an E book that I can have on my desktop. Thanks.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Someone on this forum recently called me an "outlier", so take my response under that advisement.

If someone asked for support for my adjustments and I didn't already provide them in the report, I'd provide it. Then, it is up the the intended user to evaluate that support and determine if it is credible or not.

I always have support for my GLA adjustments in the report (every report) that is intended to be used for a residential mortgage finance (regardless if it is going to Fannie or not).
I don't find a request to support GLA adjustments if they seem out-of-line with what is expected to be unreasonable.

Alternatively, I could care less if Fannie's conclusion is $50/sf if my analysis shows $175/sf. Again, it is up to the intended user to determine if the support for the $175/sf is reasonable.


I believe I've said this in response to one of your other posts: I appreciate that you are coming on this forum to share with appraisers the real-life situations which underwriters face, and the questions that they are being asked (or ask themselves) as a result of the CU process.
But at the risk of sounding harsh (which is not my intent), I'm not sure why this is a question? If you have data that indicates $50/sf is reasonable, and the report has no data or a summary of its rationale which persuades you that its adjustment at $10/sf is reasonable in the face of what you do have, simply ask the appraisal report to provide support for its adjustment.
 

hastalavista

Elite Member
Joined
May 16, 2005
Professional Status
Certified General Appraiser
State
California
Can anyone tell me what is the best book for an UW to read to better understand the process of appraising properties? I am looking for an E book that I can have on my desktop. Thanks.
Appraising Residential Properties published by the Appraisal Institute; you can go on their website and order it.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Someone on this forum recently called me an "outlier",
The only outlier you are is as one of the more thoughtful, educated, and careful posters on the forum. And by educated, I mean in the traditional classic education of the authoritative texts and keeping up with the peer reviewed articles of this profession. We have too many appraisers who think the 4000.1 and Fannie Selling Guide represents the "authoritative" texts of this profession.

Boykin is good - particularly the land valuation book
https://www.amazon.com/dp/0922154643/?tag=realestatappraat&tag=realestatappraat
https://www.amazon.com/dp/0139484310/?tag=realestatappraat&tag=realestatappraat

The "bible" of appraisal is The Appraisal of Real Estate and an older edition would serve your purpose - 9, 10, 12... and low cost.

Off hand I can't think of any texts that are on Kindle or on line, but you might check the Appraisal Institutes Lum Library
 

JTip

Elite Member
Joined
Oct 12, 2004
Professional Status
Certified Residential Appraiser
State
Pennsylvania
In the example I am looking at the appraiser is reflecting a $10 sf adjustment and the FNMA model is $50sf in LA county?

A $500k house is not $10/sf whereas homes in my local area are commonly adjusted at $10/sf in the $30-$70k price point range.

Lot size adjustments are based on economy of scale. Additionally an extracted lot value of $0.25/sf does not mean the subject/comps are adjusted at that value. Perhaps a $0.10/sf adjustment would apply as a contributory surplus value.

You need to read several hardcover books.
 

residentialguy

Elite Member
Joined
Mar 24, 2009
Professional Status
Certified Residential Appraiser
State
Minnesota
FNMA is now giving full indemnification for appraisals that score 2.5 or less.
Never, ever let anyone or any entity sway you from communicating your actual results in a way that is most meaningful and never let them sway you to do your appraisal in a way that is misleading. Your peers' data may not be right and/or their information is not being presented correctly. Of course, they won't show you their information.

 
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