Data Cancer found....

[J Grant]

I'm not trying to prove or disprove his analysis or his conclusions. I am critical of his use of a waterfront property which isn't well bracketed as his poster child. Watching his vid it appears he's attributing the difference in pricing when compared to the others to the waiver. Without even mentioning the larger size and the water influence, whether he thinks it adds to the value or not.

And you can say "F the bracketing" if you want, but if we're trying to isolate an adjustment factor by group comparisons then it's not that helpful when 2/3 of a dataset aren't large enough to be considered directly comparable to our subject's size. You know this so I don't know why you're even arguing the point.

So now when you say these examples are almost unheard of in your area you are contradicting the prevailing criticism of waivers, that they'll force the pricing up via the data cancer thing. You might be right about them not being that common among the sales, but if you are then something has to give here - either they're common enough to move the entire market or they're so scattered or uncommon as to not be that big a deal.

The GSEs say they handle 60% of the mortgages and their October waiver numbers were apparently 13.5% of the purchases.

60% of 1000 = 600
13.5% of 600 = 81
81/1000 = 8.1% of all mortgages. Not counting the all-cash purchases, so the waivers represent an even smaller percentage of the total number of sales. This is in a discussion alleging waivers are basically driving the price increases in the market.

It seems a lot higher than that - can you link where the 13.5% comes from? They keep changing their numbers and how they compute them. FF recently expanded the purchase WAIVER to allowing 90% LTV which will increase the number ordered.al

 

[George Hatch]

Exactly how much residential assignments do you do? What you may think you're able to bracket, I just about guarantee that another variable is compromised--in the real world. You're arguing theory. Phil used a single real life example. Imagine walking into court on the opposite side and he puts those graphs and data up on the screen. You may have a theoretical point, but given the presentation and narrative, who makes the better case?

How can anyone truly know exactly how waivers impact market prices if Fannie/Freddie and/or NAR refuse to make waivers a searchable factor? I've been advocating for years, that if a comparable involved any kind of GSE financing, the closing statement SIGNED BY BOTH PARTIES should be made available to the appraiser(s), all confidentiality aspects notwithstanding.

Is one sale enough to move a market? I'm prone to believing that a high sale is more likely to be used by an appraiser in an assignment than a low one. You can't have it both ways, and we should both know that's a reality.

While one sale may not be enough to move an entire market, it may have very well influenced the next Realtor, buyer and seller-- and influenced the appraisers doing lending appraisals in that market thereafter.

What I love about statistics and the numbers you posted above, is that only 8.1% of all mortgages may be waiver impacted and in the big scheme of things, that's pretty insignificant. Until you're the guy who relied on the high sale, or the appraiser that used that sale as Comp #1. Then the stats become a little more personal than 8.1%. At that point, for that guy, the impact is 100%.

Firstly, if I put something out then the burden of proof to support my reasoning is on me. Not on you. If you have a reason to question or challenge and are willing to show some work - which I actually did from the outset - then we can discuss it.

As for the actual use and user of these appraisals, the homeowner and the purchase decision THEY made prior to even applying for a loan is not it. Not to mention the point that they can include an appraisal contingency in their contract AND demand an appraisal instead of applying for a waiver at their own discretion.

I've already commented that it is not the role of appraisers or lender or the GSEs to regulate the pricing in the market. We don't prevent cash buyers from paying too much or too little so saying the same about waiver or deminimus transactions doesn't amount to a stretch.

I even said that if appraisers are so worried about the buyers paying too much they can market their services to the buyers and see if any of them will buy what we're selling. Maybe they will if appraisers can effectively market that usage.

 

[Alsie35]

I take no position on whether waivers create "data cancer" because I do not have the stats that Fannie has, nor am I even sure what % of loans will go the waiver route once 2025 rolls around.

I will say that doing the "easy-peasy" refinances of tract homes was the bread & butter that made appraising an awesome business model if you had a system built to handle it - in volume. Now everything we're doing is FHA (with its share of inevitable old-home-problems requiring re-inspection), and rentals in cheaper districts (refer to the FHA comment re: condition), with the occasional refi thrown in.

I am suspecting that there will be an uptick once % rates go down and #47's policies get the economy roaring again. But we'll never see the days of 2015-2022 again. Happily, our sights are now set much lower and so long as we can just pay the bills for 4 years starting in 2025 til we cash in our Soc.Sec., we can let our nest egg keep growing.

Verdict: Cautiously Optimistic (your mileage may vary)

P.S. I am frankly mystified as to why anyone who has retired from the business would ever post on here, but - hey - I'll assume its for the entertainment value (right Charles West?) rather than lack of outside interests.

P.P.S. While I have a Masters in "Bloviation", I never bloviate about Fannie/Freddie because there's no point. It would be like an ant bloviating about an elephant. It would not change the elephant's behavior one iota. Explanations of how Fannie/Freddie policies will affect our work model are, of course, welcome. Getting mad about it is pointless, however.

 

[George Hatch]

It seems a lot higher than that - can you link where the 13.5% comes from? They keep changing their numbers and how they compute them. FF recently expanded the purchase WAIVER to allowing 90% LTV which will increase the number ordered.al

AEI publishes a summary every month

https://www.aei.org/wp-content/uploads/2024/12/GSE-Appraisal-Waiver-Infographic-October-2024-Final.pdf?x85095

And you're right - as their usage of 80+% LTV waivers increase we'll see how many of them get made. As of the end of October there were zero waivers used for purchase or cash out mortgages at LTVs in excess of 80% at either Fannie or Freddie. Allegedly

 

[George Hatch]

I take no position on whether waivers create "data cancer" because I do not have the stats that Fannie has, nor am I even sure what % of loans will go the waiver route once 2025 rolls around.

I will say that doing the "easy-peasy" refinances of tract homes was the bread & butter that made appraising an awesome business model if you had a system built to handle it - in volume. Now everything we're doing is FHA (with its share of inevitable old-home-problems requiring re-inspection), and rentals in cheaper districts (refer to the FHA comment re: condition), with the occasional refi thrown in.

I am suspecting that there will be an uptick once % rates go down and #47's policies get the economy roaring again. But we'll never see the days of 2015-2022 again. Happily, our sights are now set much lower and so long as we can just pay the bills for 4 years starting in 2025 til we cash in our Soc.Sec., we can let our nest egg keep growing.

Verdict: Cautiously Optimistic (your mileage may vary)

P.S. I am frankly mystified as to why anyone who has retired from the business would ever post on here, but - hey - I'll assume its for the entertainment value (right Charles West?) rather than lack of outside interests.

Nah, don't hassle her for having an interest. Agree or disagree, Joyce Potts has always argued her opinions in good faith. If it wasn't her making these arguments it would be someone else because there are plenty of appraisers who share these views.

 

[shrubberyvaluation]

Firstly, if I put something out then the burden of proof to support my reasoning is on me. Not on you. If you have a reason to question or challenge and are willing to show some work - which I actually did from the outset - then we can discuss it.

As for the actual use and user of these appraisals, the homeowner and the purchase decision THEY made prior to even applying for a loan is not it. Not to mention the point that they can include an appraisal contingency in their contract AND demand an appraisal instead of applying for a waiver at their own discretion.

I've already commented that it is not the role of appraisers or lender or the GSEs to regulate the pricing in the market. We don't prevent cash buyers from paying too much or too little so saying the same about waiver or deminimus transactions doesn't amount to a stretch.

I even said that if appraisers are so worried about the buyers paying too much they can market their services to the buyers and see if any of them will buy what we're selling. Maybe they will if appraisers can effectively market that usage.

I'd guess many think the information they get from their agent and zillow/redfin is enough for price info.

 

[TerryRohrer]

Exactly how much residential assignments do you do?

Careful! That is a J Grant line!

 

[Joyce Potts]

I take no position on whether waivers create "data cancer" because I do not have the stats that Fannie has, nor am I even sure what % of loans will go the waiver route once 2025 rolls around.

I will say that doing the "easy-peasy" refinances of tract homes was the bread & butter that made appraising an awesome business model if you had a system built to handle it - in volume. Now everything we're doing is FHA (with its share of inevitable old-home-problems requiring re-inspection), and rentals in cheaper districts (refer to the FHA comment re: condition), with the occasional refi thrown in.

I am suspecting that there will be an uptick once % rates go down and #47's policies get the economy roaring again. But we'll never see the days of 2015-2022 again. Happily, our sights are now set much lower and so long as we can just pay the bills for 4 years starting in 2025 til we cash in our Soc.Sec., we can let our nest egg keep growing.

Verdict: Cautiously Optimistic (your mileage may vary)

P.S. I am frankly mystified as to why anyone who has retired from the business would ever post on here, but - hey - I'll assume its for the entertainment value (right Charles West?) rather than lack of outside interests.

P.P.S. While I have a Masters in "Bloviation", I never bloviate about Fannie/Freddie because there's no point. It would be like an ant bloviating about an elephant. It would not change the elephant's behavior one iota. Explanations of how Fannie/Freddie policies will affect our work model are, of course, welcome. Getting mad about it is pointless, however.

I

Careful! That is a J Grant line!

Where do you think she got it from?

 

[George Hatch]

I'd guess many think the information they get from their agent and zillow/redfin is enough for price info.

I just had a homeowner try to engage me a couple weeks ago to appraise his custom home/2ac property because he thought the appraiser who appraised it the week before had screwed up. I started doing the research and the comparables all pointed in the direction the original appraiser concluded to, so that's what I told the property owner (I basically talked myself out of that assignment).

I offered to consider anything he thought was relevant so he did the "search by price" thing in Zillow and came up with some sales in his target price range. Not any different than what a lot of brokers do. Obviously none of them panned out when I looked them up, which when I explained how/why that's when he agreed that there was no point in spending more money on another appraisal.

My point here is that the Zestimate itself is usually counterproductive but it's still pretty cool for a layperson to have direct access to at least some of the raw data points and to have the means to build their own searches. That wasn't possible back in the day.

 

[George Hatch]

Just a factoid. The property in question was listed at $410K and sold for $430K, The smaller lake adjacent sale was listed at $339,900 and sold for $359,900. Another sale was listed at $325K and sold for $359K.

According to the public records at the County this property also had prior sales
$350k in 09/2021
$240k in 06/2018
$179k in 12/2011

If I had access to the data and I wanted to see how this property has previously stacked up when compared to all the others nearby then each of these transactions can be used for such comparisons for those time frames. I wouldn't need to be engaging in any guesswork as to whether or not the location is of significant effect on the pricing.

These transactions all predate the 3yr limit in Zillow's reporting of the sales, but they'd be super easy to do for someone who has access to the local MLS.