Appraiser Expertise Question

[Joe Flacco]

I can see how farmland might be adjusted based on per acre basis but a per SF adjustment for single family residential land area doesn't even make sense. It is not reflective of market behavior.

 

[Howard Klahr]

Someone on this forum recently called me an "outlier"

You're an "outlier" alright

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?

Adjustments are meant to be applied for each appraisal individually. Comparables are compared to the specific subject of the report and as you can imagine these will change from assignment to assignment. Having said that, when working within similar neighborhoods comprising similar properties , demographics/buyer profiles, physical and locational characteristics, yes there will be general tendencies exhibited.

This means that specific adjustment are not extrapolated for specific items across an entire metropolitan area and then universally applied. Rather they are focused more on the immediate micro market for the subject property.

 

[ucbruin]

This means that specific adjustment are not extrapolated for specific items across an entire metropolitan area and then universally applied. Rather they are focused more on the immediate micro market for the subject property.

At least that's the "theory".....

 

[glenn walker]

Underwriters are required to complete a simple desk review on appraisals and some run the CU Fannie Big Green machine. When I worked with underwriters I looked at hundreds of CU scores and almost none made any sense from an appraisers point of view or training. There were reports scoring 4-5 on good solid appraisals and others scoring at 2-3 that were terrible. The new Fannie pilot program will allow loans to be funded without appraisals if the score is below 2.5 )

In my opinion there is just no way for an underwriter or appraiser to figure out how or why the CU scores appraisals and It may be designed that way so slim-shady doesn't figure a way to manipulate the scores .

 

[J Grant]

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.

If you can manage the time, take a class, a live class is better, but online is good too...the basic class of introduction to appraisal for example.

 

[J Grant]

I am curious what a Fannie model is based on...is it based on an AVM of the subject property? Or results of prior appraisals? Regression for each adjustment? Any insight would be appreciated.

 

[Noreen]

Another thing to consider is, at least in my market area, a home in the $200-300K price range will adjust different ranges than a property $500-750K due to quality, market expectations, differences in neighborhoods and typically condition. I do remember reading a Q&A on more finite requirements of the condition ratings based on the level or remodeling & renovations, if I remember correctly is was March/April 2015 right when the guidelines/forms changed.

 

[J Grant]

The new Fannie pilot program will allow loans to be funded without appraisals if the score is below 2.5 )

How can a score be below 2.5, when there is no appraisal to "score?" I believe the pilot program works a bit differently than that?

 

[norapp]

Land adjustments depend where the subject and comps are located. You say the appraisal was in LA County. I'm a NY Appraiser but am familiar with Los Angeles. If the land is in a heavily concentrated area where lots are small and uniform and there is a big difference is lot size the adjustment should be larger. If it is in an outlying area where land is excess/residual and more readily available adjustments should be less. You can't look at an area such as LA County and treat every lot the same. Neighborhood and what is typical for that neighborhood should be the basis for adjustments. Not what a computer is generating for a whole county. As for condition adjustments, they should be as compared to the subject. Interior photos can show us some of what is in a property but if you've ever seen a home online with pictures and then see it in person and think wow. This is not how it looks. Well that's what we face every day. I find it astonishing a computer is grading appraisals when many of the properties I appraise are rural, not typical, comps over a 5-10 mile radius and spread over 3 years. I do a lot explaining in my reports but I'm sure that part is not being considered in CU.

 

[Terrel L. Shields]

I can see how farmland might be adjusted based on per acre basis but a per SF adjustment for single family residential land area doesn't even make sense. It is not reflective of market behavior.

Easier analysis typically, but size matters even in small tracts, but often is overwhelmed by utility, view and location so size is a difficult metric to gauge. I know that new subdivision lot prices seem to rise as lots sell, a scarcity factor that appears to be independent of home values even in the same subdivision. The first lot may sell for half the last three years later while home prices are barely 10% higher.