Mary's Blog

If you have not seen my prior post on the UAD and how it affects you please go here now.

UAD is now in effect. I have already seen some Realtors adding comments in the FMLS/MLS system about renovations and updates to the home, especially kitchens and baths, which all appraisers must include in their reports effective 9/1/2011. So thanks to those who are doing this now!

The other thing that was not noted in my prior blog that also needs to be addressed either under the photos or in your FMLS comments is the number of other rooms finished in the basement aside from bedrooms and baths. We need the total number of other rooms or you can label them in your photos, ie: Theater, Kitchen, Family Room, Rec Room,etc. We have to know how many other rooms are FINISHED in the basement for all of our appraisal reports. 

The good news about this is that owners may wind up getting more credit for rooms finished in the basements such as kitchens, theaters, baths, etc. Before we just looked at the total heated square footage and gave a per square foot adjustment depending upon quality and finish work, but now if we have details on what is finished in the basement, if the subject has more high end rooms finished such as kitchens and theater rooms that cost BIG bucks as opposed to just bedrooms, we can justify giving credit where credit is due for these basement variances. So do your sellers a favor and include this date in ALL of your listings.

Please take those photos of the basements and label them and remember give us the year the kitchens and baths were renovated and to what extent. This will save you lots of time from having to return calls to appraisers who need this information.

Thanks guys, Pass this along to all you know and make sure you pass along my other Blogs on this topic.

See My Other Post on this topic

See my 2nd Blog on this Topic

If you did not see my recent Featured post on the new UAD (Uniform Appraisal Dataset) requirements for appraisals, it received considerable positive feedback, comments and RE POSTS due to its very important and timely information!

Below is a link to that blog. AS PROMISED, I am now providing you with the all important DEFINITIONS for the new codes that will be seen on all appraisal reports across the Country starting on September 1, 2011. 

As you will see Q = Quality and C = Condition and then there are numbers that follow to describe the property. See below.

 Refer to my past blog on the UAD  

 Market Grid Descriptions - C = Condition Rating, C-1-Excellent (Brand New) C-2 - Good (Like New) C-3 - Above Average (Similar To Its Age With Some Renovation) C-4- Average (Normal Wear And Tear For Its Age) C-5 - Fair (Need Some Work Done, Some Cosmetic, Some More Significant, Residence Is Still Functional) C-6-Poor (Needs Major Work And Renovation, Safety And Structural Integrity Likely Affected)

Q = Quality Rating  Q-1 - Excellent (Exceptional Quality Seen Only In Custom Homes With Significant Exterior And Interior Finish Work, Extensive, Upgraded Trim Work & Upgrades); Q-2 - Very Good ( Most Likely Custom Designed/Built Or Located In High Quality Tract Development With High Quality Upgrades, Ornamentation And Trim Work); Q-3 - Good (Seen In Standard Residential Developments From Standard Readily Available Floor Plans, With Upgraded Features And Finish Work Above The "Stock" Options); Q-4 -Above Average ( Homes That Are Standard Plans Which Have A Few Upgrades From The "Stock" Or Standard Builder Plan); Q-5 - Average. (Homes That Are All Standard Or Stock According To Builder Plan. These Homes Are Built To Minimum Building Codes And Constructed With Inexpensive, Stock Materials); Q-6 - Fair (Homes Built With Simple Plans Or No Plans At All, With Low Quality And Cost Materials, Possibly By Non Professional Unskilled Workers; Mechanical Systems May Be Minimal Or Non Existent, Older Homes That Have Features Which Are Sub- Standard Or Non Conforming Additions To The Original Structure).

Description Of Improvements: - This is Located On The First Page Of The Appraisal Report and will describe Not Only Condition But When The Last Renovations or Updates, If Any Were Performed, which Include Kitchen And Baths And When these renovations or Updates occurred over The Past 15 Years. i.e.; Less Than 1 Year Ago, 1-5 Years Ago, 10-15 years ago, 11-15 Years Ago, over 15 years ago. THIS IS WHY IT IS SO IMPORTANT TO KNOW IN WHAT YEAR RENVATIONS WERE PERFORMED IN ALL OF YOUR LISTINGS, WHENEVER POSSIBLE OR YOU WILL BE GETTING LOTS OF CALLS FROM APPRAISERS FOR THIS INFORMATION.

Basement Data: One the Grid page of the report, the First Line in the basement section shows Total Square Footage as well as how much of that total square footage is finished.  On the 2nd Line it Shows Details On What Rooms Are Finished In The Basement, ie; rr=Rec Room, Ba=Bath, Br=Bedroom O=Other Rooms. 

 Location & View N=Neutral-Typical Residential Neighborhood And Views, B= Beneficial Such As Location In Development With Amenities And Views Such As Lake Or Golf Course. A=Adverse, Such As Location In Poorly Maintained Development, Views Of Power Lines, Views Of Commercial Buildings In a Residential Area, Views Of Rail Road Tracts, Views Of Vacant Run Down Homes, You get the idea!

So now you have it, incorporate this wherever you see fit in order to help your homeowners out!

Pass this along to every Realtor you know. Re-blog this post, whatever you can do to get the word out!  

As of September 1, 2011 appraisals will change drastically. We now must complete appraisals in what is defined as UAD or Uniform Appraisal Dataset format. This is a GSE Fannie, Freddie requirement. 

What does this mean for you? The new reports will look foreign to you and your clients with all the codes we have to use in the reports, so you will have to be versed on what the codes mean. Instead of the old days where we described a property as being Good in condition or Good in Quality of Construction, we will now be using codes such as Q=3 and C-2, etc. It will be far less user friendly to read and more automated system friendly. Fannie and Freddie want consistency across the board for all appraisals nationwide and the codes are   the way they are trying to get this accomplished. They have clearly defined what Fair, Poor, Average, Good, Very Good and Excellent Quality and Condition should entail. No more leeway in how appraisers determine this on their own. Lenders are also gearing up for uniform delivery of their loan packages and the UAD is part of this whole process.

If you GOOGLE UAD or Uniform Appraisal Dataset you should find a wealth of information on this topic. Be prepared and prepare your clients! 

What do we as appraisers need from you? One of the big changes is we must know in what YEAR any renovations to the BATHS and KITCHENS were completed. In addition to the comments you already place in FMLS/MLS about renovations, we need the renovation year for the kitchens and baths. If the exact year is unknown then we need a specific range, ie: less than 1year ago, in the past 5 years, in the past 10 years or in the past 15 years. 

If we cannot get this information in FMLS/MLS for the SUBJECT we must contact the owner if available or the Realtor and get this information and this takes time and mayt also delay closings! For all the comparable sales and listings that we use in our reports, we of course cannot contact the owner, so we will be contacting you the Realtor unless you have this information in your comments and photos.  While we do NOT have to indicate year of renovations for the comparables, we really need this information in order to properly compare them to the SUBJECT. So any listing you have, please include as much detail about renovations as possible!

What else do we need from you? We need photos! Lots of them, more the better. Photos of the renovations and if you can add descriptions under your photos, please include the YEAR the renovations to kitchen and baths were completed or use the range noted above. Also needed is extent of renovation! Was it a REMODEL  or just an UPDATE. For appraisal purposes a Remodel means a significant change, Gutting of the bath or kitchen, all new fixtures, flooring, cabinetry, appliances, etc. VS. Updating which brings it to current market appeal and standards without a total REDO! New Paint, Some new fixtures, refacing of cabinets, etc.

We must have this information included in every appraisal report. So if all Realtors add this information in the comments or under your photos, life will be easier for all as the appraisal will be completed SOONER and the deals will closed faster. Win/Win for everyone! Not to mention, the homeowner needs to get full credit for renovations and when they were performed!

** FOR THOSE OF YOU WHO PROVIDE GREAT DETAIL AND PHOTOS IN YOUR REPORTS, APPRAISER'S AND OF COURSE THE SELLERS THANK YOU!

I hope this POST is featured as we have to get all Realtors on board with this ASAP! So please pass this along to your Brokers too and let me know if you have any questions.

In Future Posts I will define in more detail the codes (which will look foreign to everyone for awhile) and what they mean and how they are defined in our reports

Thanks guys! 

Mary Thompson

Certified Appraiser

http://www.lakelanierappraiser.com

Pass this along to every Realtor you know. Re-blog this post, whatever you can do to get the word out!

As of September 1, 2011 appraisals will change drastically. We now must complete appraisals in what is defined as UAD or Uniform Appraisal Dataset format. This is a GSE Fannie, Freddie requirement. 

What does this mean for you? The new reports will look foreign to you and your clients with all the codes we have to use in the reports, so you will have to be versed on what the codes mean. Instead of the old days where we described a property as being Good in condition or Good in Quality of Construction, we will now be using codes such as Q=3 and C-2, etc. It will be far less user friendly to read and more automated system friendly. Fannie and Freddie want consistency across the board for all appraisals nationwide and the codes are   the way they are trying to get this accomplished. They have clearly defined what Fair, Poor, Average, Good, Very Good and Excellent Quality and Condition should entail. No more leeway in how appraisers determine this on their own. Lenders are also gearing up for uniform delivery of their loan packages and the UAD is part of this whole process.

If you GOOGLE UAD or Uniform Appraisal Dataset you should find a wealth of information on this topic. Be prepared and prepare your clients! 

What do we as appraisers need from you? One of the big changes is we must know in what YEAR any renovations to the BATHS and KITCHENS were completed. In addition to the comments you already place in FMLS/MLS about renovations, we need the renovation year for the kitchens and baths. If the exact year is unknown then we need a specific range, ie: less than 1year ago, in the past 5 years, in the past 10 years or in the past 15 years. 

If we cannot get this information in FMLS/MLS for the SUBJECT we must contact the owner if available or the Realtor and get this information and that takes time! For all the comparable sales and listings that we use in our reports, we of course cannot contact the owner, so we will be contacting you the Realtor unless you have this information in your comments.  While we do NOT have to indicate year of renovations for the comparables, we really need this information in order to properly compare them to the SUBJECT. So any listing you have, please include as much detail about renovations as possible!

What else do we need from you? We need photos! Lots of them, more the better. Photos of the renovations and if you can add descriptions under your photos, please include the YEAR the renovations to kitchen and baths were completed or use the range noted above. Also needed is extent of renovation! Was it a REMODEL  or just an UPDATE. For appraisal purposes a Remodel means a significant change, Gutting of the bath or kitchen, all new fixtures, flooring, cabinetry, appliances, etc. VS. Updating which brings it to current market appeal and standards without a total REDO! New Paint, Some new fixtures, refacing of cabinets, etc.

We must have this information included in every appraisal report. So if all Realtors add this information in the comments or under your photos, life will be easier for all as the appraisal will be completed SOONER and the deals will closed faster. Win/Win for everyone! Not to mention, the homeowner needs to get full credit for renovations and when they were performed!

I hope this POST is featured as we have to get all Realtors on board with this ASAP! So please pass this along and let me know if you have any questions. In Future Posts I will define in more detail the codes (which will look foreign to everyone for awhile) and what they mean and how they are defined in our reports

Thanks guys! 

Mary Thompson

Certified Apprasier

www.lakelanierappraiser.com

This post is in memory of my Father, Peter Kalmes, who was a great person, a very hard worker, great role model, husband, brother, son, etc.

He served in WWII and I know he is in heaven watching over all of us. He had a huge impact upon my life. He had his own business and so do I. He loved sports and was a champion Pitcher and I was a good pitcher in my day...Won MVP in a Co-Ed Softball Team. He was a sensitive Guy....I cry at commercials! He was a very good looking guy. Well I guess I can pass for Cute! :) He was funny, I love to laugh!

For all the Father's out there and for all Children of Fathers, Take this time to appreciate your FATHERS as you never know how long you will have them and no matter how old you are you will miss them when they are gone.

Father's, make sure to take the time to enjoy your kids as the moments are fleeting and pretty soon they will be out of your home.

Remember this: Kids remember many things and those little but special things you do as a Father will be remembered and form your child forever, so make sure those special moments are truly memorable.

Have a great Day Father's! Thanks for bringing your wonderful Children into this World.

FDIC SUES LSI AND CORELOGIC  LSI Appraisal and CoreLogic being SUED. The SUIT contains accusations of gross negligence, breach of reps and warranties, and other breaches of contract for defective and inflated appraisals"

Click on link above to read more and make sure to read all the comments too!

LSI is one of the worst AMC's out there who have always paid low ball fees and expected unrealistic turn times without regard to quality. The lowest quoted fee gets the job, I know this for a fact as I never get work from them due to my NORMAL fees. I do work for their Relocation division. That is separate and they pay R & C fees.

As I stated it my reply to this news, it could not happen to 2 better Companies. LSI continues to send out condescending emails to Appraisers telling them what they are doing wrong, they ask for more and more ridiculous information and want the report to be formatted in a certain way, with certain commentary, on and on... But do they pay for the extra time involved.  H E _ _ NO!

They should love the UAD coming in September, but that is another BLOG topic for another day.

I have always been a believer of you get what you pay for and when you get paid $195.00 or $200.00 and they charge the borrower $400.00 something is definitely wrong. No wonder they have problems!

As far as I know LSI is not going to change their ways and start paying Reasonable & Customary as required by the Dodd-Frank Bill. They are finding loop holes in that Bill . They refuse to pay for good appraisers who refuse to INFLATE values just to make the deals work. Inflated Appraisals is one reason why they are being sued.

Check out my prior blog post below, which definitely should be Featured as it solicits some great thought and commentary and is a real and current issue.

My Last BLOG about Perveived vs Market Value

With the recession (I believe we actually had a depression not a recession) comes the law of unintended consequences!

Here is the deal. I want to hear your take on this!

Buyers are so used to price after price after price reductions and LOW, LOW sales prices that their perception of VALUE may be skewed and it may not be in their best interest.

Case in point. I appraised a home where the last sale in the same S/D was just a month prior for $125,000. Very similar style, appeal and quality home. The buyer really wanted to be in this development and there are NO other listings now available. They are willing to pay the same price for this home as the one that just sold (the one that sold however, is 600 square feet larger). The seller has no problem paying $125,000 for this home even if it is smaller, because there were no other homes in this price range that they liked and in the hey day of 2006 this home sold for $240,000. So $125,000 is ONE hell of a deal......or is it?

Based upon that most recent sale and a few others in neighboring developments the appraised value was UUGGHH dare I say $110,000. That most recent sale told the story on value and it was NOT a foreclosure sale either!

So the Realtor calls me to discuss value (how dare he...LOL) and we have a whole discussion about how this was the last home available, supply and demand issues, the home was better in THIS buyer's mind than any other they saw and they really wanted to be in that S/D.

Problem is this: While I totally understand supply and demand impact on value, the principles of substitution, etc. Based upon very recent sales, as well as some listings, this home was not worth $125,000. It was worth $125,000 to this buyer, but does this buyer represent all buyers or the general populous of buyers out there?

Market value is what someone is willing to pay in an open market, working in their own best interest, they are knowledgeable and prudent and there is not any undue stimulus....BLAH, BLAH, BLAH.... So you may say hey this person is willing to pay $125,000. But here is the problem. Are they really knowledgeable about the comps out there? As appraisers we cannot make adjustments on perception, we can only make adjustments on real market data. If we can prove via DATA that perception does equate to a certain dollar figure...GREAT! But good luck on that approach to value!

The Realtor and I discussed about how appraising is an ART not a Science and in this case I should have been able to make an adjustment for the fact that supply is low, demand is high and even if sales don't support the value, PERCEPTION supports an upward adjustment.

The sad truth is if we adjusted on the "ART" of the profession or the perception of value without some SOLID numbers and analysis to back that adjustment up, the Underwriter is going to have a field day with our report! 

I then wanted to remind the Realtor, Appraisers are here for the sole purpose of protecting the Lender when we are dealing with a Lender appraisal. We are their eyes and ears and that fact has not changed in all the years I have been appraising, with all the changes in this field. What if this lady purchased the home for $125,000 and God forbid she defaulted and then there were plenty of listings and sales in that same S/D available, all under $125,000! Now the Lender WILL lose money....So that is why it is imperative to provide a current, real and supportable value for the subject. If the lender today loaned $15,000 more in this case than the home is worth, who knows how much money they will lose down the road when they have to put it back on the market, especially in THIS market. 

I will end with my favorite Line, that surprises many people still......

APPRAISER'S DO NOT DETERMINE MARKET VALUE FOR A PROPERTY! THE MARKET DOES! PERIOD!

APPRAISERS ANALYZE THE MARKET AND THEN THEY REPORT  WHAT THEY FIND IN THE FORM OF AN OPINION OF VALUE FOR THE PROPERTY. WE ARE NOT SO POWERFUL AS TO DIRECT THE MARKET VALUES FOR ANY GIVEN AREA. THE MARKET DOES THAT ALL ON THEIR OWN. WE ARE JUST THE BEARER'S OF BAD NEWS SOMETIMES!

Let me hear from you and what you believe to be true! Times they are a Changing Daily!

I was doing an appraisal in a fairly nice development in Cumming, GA near Lake Lanier. price range in the upper $300,00 to low $400,000 range. Much to my surprise I saw several homes being built, NEW homes, new construction, Construction trucks in the street that I had to drive around, lots of workers framing, roofing, etc. Not just one or two but several homes being built. It was like a trip back to 2005 -2006 and earlier. 

I remember the Ol days with fondness. Sometimes not so fond as I had a few flat tires driving over nails and such in the new developments, but this was a wonderful sight to see. Is there hope on the horizon?  We certainly are seeing more sales than we have in the past year. There of course are still alot of foreclosures and short sales but not as many.

A fellow Appraiser friend of mine in the Atlanta Metro area said some Realtors are actually getting homes under contract in days as they are in limited supply. These are homes that have already been renovated. People looking for homes that have already had the work done as they do not have the money or the time to invest in this undertaking. So this is GREAT news for investors out there. 

I have also seen more homes that were purchased cheap fixed up nice and a tidy profit made in a few months time. So all good signs.

The FDIC is talking about requiring a 20% down payment for home purchases. OUCH, if you don't have the 20% then you have to pay a higher percentage rate and MI insurance rates may rise. We will know first week of June when the decision is supposed to take place.

But anyway, just wanted to share my discovery about the new construction. I hope I see alot more of this kind of thing and if I do I will report.

Mary Thompson

Certified Appraiser

Lake Lanier Specialist

http://www.marytappraisals.com  

In case you missed the start of my Reality Series, Here is a link to it below. If Active Rain decides to Feature this Blog, maybe more eyeballs will be able to take advantage of all the information I plan to provide, so you can pass along to your Sellers and Buyers and fellow Realtors!

Reality Series Part I

Part II: When appraisals are completed and sent to the lender, they are reviewed by Underwriters. These people may not be Appraisers at all and many times they do not even live in the same state as the appraiser....so needless to say sometimes their reviews lack expertise and some of the requests of appraisers go beyond crazy. Just ask an appraiser about the wildest underwriter or reviewer question of their appraisal reports and you will get an ear full!

Well I have been appraising for 17 years and this week I had a review that really takes the cake...

 Here goes:

The first question was what is the difference between Average+ and Good condition!! To me this is Appraiser 101, but this will be good information for you as it will show you how we make adjustments for condition of a property. First of all you have the ACTUAL age of the home. It could be 30 years old. Then you have what we call in the appraisal world the EFFECTIVE age....That is the age that we decide the home appears to be based upon how well the home has been maintained and if there were any renovations performed. Typically the labels we use for condition range from Poor to Good. Poor, Fair, Average, Average+, Good. You might see a Very Good or Excellent label, but most times you will not see Poor or Excellent on a report.

Poor: Well the home is in really bad shape cosmetically and structurally too and it may be one to PUSH over and start over again. Fair: needs work, mostly cosmetic, it shows its age plus some, but it can be renovated. Average is just as it seems, it appears its ACTUAL age. Average+ it is above this Actual age to a certain degree, because the home has been taken care of and maybe there was some new carpet or appliances along the way. They don't have to be upgraded or top of the line renovations. That falls under the QUALITY rating and that will be the subject of another series. Good: The home has not only been taken care of but renovated, so it appears like new or it may be new. I am sure you have seen a 2 or 3 year old home that is trashed, so just because it is only 2 or 3 years old, does not mean we will would rate that GOOD condition. It depends on maintenance and renovations along with age. Excellent is BRAND spanking new.....many times appraisers will just call this GOOD. There is some leeway between appraiser's but overall, the condition labels should be fairly consistent. As for the adjustments for the variances, well they can be wide and varied, depending upon the price range, age of home, amount of renovations, etc.

I think the poor reviewer in my case (which by the way per new regulations is supposed to be someone trained in appraisals or an appraiser, not just some employee who has no clue about appraisals) was confused because I was calling a few 30 year old homes Average + and Good and she was thinking a 30 year old home cannot be good! Well it can be if it has been renovated and maintained and it is in like new condition.

Then the reviewer really threw me for a loop.....She asked why is there a need for an electronic fence "see photo of mailbox" which had a sign saying there was an electronic fence ... I about fell off my chair....HELLO....The owner has a dog! Common thing here in Georgia and everywhere! So I told her they have a dog, no other reason for fence. So I am trying to understand why such a question would be asked. Only thing I could come up with was the reviewer (in another state) must think this is one BAD A_ _ neighborhood to require an electronic fence! LOL Maybe they don't want to do the loan if there are issues with marketability, etc. I think they are going off the deep end here. If that was the case, we are supposed to report all market and neighborhood issues! Of course there were no issues, so nothing was noted in the appraisal.

So that is my second series for this week. Look for Series III next week,

Thanks for stopping by.

Mary T. Thompson

Certified, FHA Approved Appraiser

http://www.marytappraisals.com

I was thinking it would be of great benefit to all here on Active Rain for an Appraiser like myself to provide a regular Reality Series if you will, on how we view properties, the things we look for that will add or detract from value, some real insight from one who is out in the field every day, which you can pass along to your sellers and buyers.                                                                              

So here goes with my first installment of Mary Thompson's Reality Series -The Real Appraisal World. Since Reality Shows as so popular, I thought why not start my Own Reality Series right here on Active Rain! Okay TV producers out there.....tune in...you may have found a new show idea!  LOL

Site/Land: Recently I inspected a 2 story home on a basement (unfinished) which is in the $200,000 value range. This is a Refinance. The home shows well from the street, It is in a cul-de-sac. but it is situated on a steep lot, with a heavily wooded rear yard and next to NO usable flat yard area. The inside also shows well, however, that steep rear yard is going to cost that owner roughly 5% in value, based upon the sales prices of similar homes that had flatter rear yards. Not much you can do here as an owner, other than fill for your back yard. But in this case the yard was so heavily wooded, that it would have helped considerably to have some of those trees removed for more usable area and they still would have had a very private rear lot.

Slick Finish vs. Textured Ceilings: As soon as I walk in a home and see "popcorn ceilings" the overall quality rating comes down. The home can have some nice upgrades like hardwood floors, updated kitchen and baths, but popcorn or textured ceilings reduces overall appeal and quality in our market (North GA) How much of a loss, depends upon the price range. Textured Ceilings are expected in older and lower priced homes so the value may not be affected at all because most of the comparables will have the same type ceilings. But if they are seen in more expensive homes, that is when the home will take a hit in values when compared to slick finish ceilings.

I have seen several cases where the homeowner has renovated their home, with some ceilings having a slick finish and some are still textured. Depending upon how it looks and how it flows with the rest of the home, this could affect value. You sometimes are further ahead to have all or none in this case.

We have popcorn ceilings in our home and we have gone room by room removing this popcorn because we have renovated our home with many high end upgrades and the ceilings just take away from this renovation work. In order to remove popcorn, you just spray some water on it with a water bottle sprayer, let sit for a few minutes and scrape it off. Dirty job for sure, but it comes off pretty easily, or have someone do it for you.

Even with 8 foot ceilings, I promise you, the ceilings look higher with the slick finish and it gives the impression of a superior quality built home compared to the popcorn.

That's all for today folks, tune in next week for some other actual inspection findings.

I hope you will subscribe to my blog and come back often!

Mary Thompson

Certified Appraiser 

http://activerain.com/blogs/lakelanierappraiser

www.marytappraisals.com