Condo vs. Townhome vs. PUD

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12 Day Close With Appraisal Waiver; CHECK ADDRESS PRIOR TO OFFERS!

We can close conforming (Fannie/Freddie) loans in 12 CALENDAR days – easily – IF we get a “Property Inspection Waiver,” aka PIW aka Appraisal Waiver. Savvy agents know this – so they often ask us to run “DU” (Fannie Mae’s automated underwriter) with the property address before they make an offer. If DU gives us […]Read More

#1 Factor Zillow Estimates Get The Most Wrong (Why We Need Appraisers)

I lived in the same neighborhood for over 20 years and did hundreds of loans within the area – so I knew every nuance of the area. As a former appraiser and armed with my extensive neighborhood knowledge, I was often shocked by how wrong Zillow’s estimates were. Here are some of the things Zillow […]Read More

Why Homes Have to “Season” After Close Before Appraising Them for More

“I knew a guy who sold his house for $100,000 under the market value because he felt like it…” said nobody. Ever. My point is that no seller is ever going to knowingly sell a property for under market value in this day and age – when listing information is made available to everyone via […]Read More

Desktop Appraisals Coming Soon

Desktop Appraisals Are Coming! An appraiser recently charged us $2,000 for a basic appraisal in suburbia with a slightly larger lot and a moderately short time frame – because we could not find anyone else, and he knew it. BUT – with refis drying up and appraisals getting waived or easier, that appraiser is not […]Read More

6 Things That Terrify Appraisers

Here are a few things that really scare appraisers. 1. Unusual Properties. Unusual properties include those with acreages, odd structures (e.g. a round house), multiple dwellings on one lot, adverse influences such as a nearby freeway, easements that clearly affect value, income properties (two to four units), over-improvements, unfinished structures, significant deferred maintenance, and unclear […]Read More

Appraisers Ain’t A.M.C’s (Explained); Subjective vs. Objective Too

“Hey Rich, I need a $500,000 appraisal to make this refi work; there’s an extra $300 for you if you can push the value to $500,000…” That was the entire schtick of a loan officer I knew back in the day (prior to the 2008 meltdown). He was friends with an appraiser who would push […]Read More

WSJ: “Low Appraisals Upend Home Sales”

The WSJ had this front page headline recently: Low Appraisals Upend Home Sales. And, I thought – where have you been, WSJ? Then, I thought… I should blog about this because it is a great way to warn homebuyers about potential appraisal issues. “IT’S ALL SO SUBJECTIVE” So said a seller whose house appraised for […]Read More

Appraisers Can’t Ignore “Bad” Comparable Sales; Agents Shouldn’t Either

AGENTS WERE LIVID WHEN APPRAISAL CAME IN LOW We recently had an appraisal come in $25,000 under contract price – and the agents were irate! They sent us comps that they insisted the appraiser should correlate to – but: (1) the comps were in another development a few miles away; and (2) the comps were […]Read More

Don’t Finish Your Basement (or Garage or Patio) IF…

“Your godda***d appraiser only gave $7,500 to my basement after I spent 85,000 f**king dollars finishing it! Go f*** yourself!” So said a borrower to me years ago after he reviewed an appraisal of his home that he clearly did not like (to put it mildly). Knowing that “the customer is always right,” I tried […]Read More

Bedroom Counts And Home Values – A Very Big Deal!

WHAT CONSTITUTES A BEDROOM? I wrote a blog last year called What Constitutes A Bedroom? in response to an agent who was angry because our appraiser refused to deem a 42 square foot (sf) room “a bedroom.” The appraisal came in low because the house was correctly deemed a two-bedroom instead of a three-bedroom, as […]Read More

Why Appraised Values Have To “Season” After A Purchase

“I just bought the property for $800,000 but it is worth $1,000,000 now, and I would like to refi using the higher appraised value…” We get emails like the above all the time, and sometimes we can garner the higher appraised value. But often we can’t. This is why. APPRAISERS CORRELATE TO PURCHASE PRICE This […]Read More

Holy High Appraisal Fees, Batman! Please Warn Clients!

Economist Milton Friedman famously said, “Inflation is always and everywhere a monetary phenomenon.” (meaning that it is always caused by increases in the supply of money) But, when it comes to appraisals Milton might be … wrong,** as hard as it is for me to type that. 😊 Appraisal fees have risen from as low […]Read More

How To Use Single Premium/Lump Sum PMI To Cover Appraisal Shortfalls

Recently, I blogged about why Private Mortgage Insurance is “Awesome,” pointing out why its stigma from the 1990s is so underserved. One of the many benefits of PMI is using it to help cover appraisal shortfalls, and I wanted to elaborate on that in this blog. $900,000 PURCHASE APPRAISES $100,000 UNDER Assume the following: Purchase […]Read More

Financing And Building ADUs Or In-Laws

CUTEST HOUSE I EVER SAW I have been in the mortgage industry since 1994 and have seen thousands of homes in every setting imaginable. And the cutest house I have ever seen was a 3,500 square foot brick, single-level ranch house on ten acres in the wine-growing region of Livermore Valley in California. It had […]Read More

The Need For Speed; 14-Day Closes; Appraisals Remain The Problem

14-DAY CLOSES ARE BACK! We are bringing our 14 Day Closes back in full force now, but with certain caveats. We cannot close the following transactions in 14 days: (1) Condos – because we have to wait for HOAs; (2) Jumbos – because underwriting and required appraisal reviews take longer; (3) Complex self-employed borrowers because […]Read More

Appraisal Problems – 5 Options When Appraisals Come In Low

Our Zillow rep told us yesterday that searches for new homes are down 25% from recent months, as buyers appear to be “fatigued” and are putting their searches on hold. Despite that fact, the market remains extraordinarily hot and we continue to see appraisals come in under contract price all too often. This should not […]Read More

Duplex vs. House + In-Law Unit (ADU)?

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Appraisal Woes Not Your Lender’s Fault; Blame Andrew Cuomo :)

One of the most frustrating and expensive aspects of our business is dealing with low appraisals. It is frustrating because borrowers invariably blame us for the problem – even though we have very little control over the issue. It is expensive because we often end up throwing money at the issue to assuage borrowers and […]Read More

Appraisers Can’t Push Values; Must Avoid Reviews/Cuts

APPRAISAL COMES IN LOW We had an appraisal come in slightly under contract price this week. What made it a surprise was the fact that there seemed to be ample comparable sales to support the value (unusual in this market, to say the least). So, when the appraisal came in low, both agents, the seller […]Read More

Covering Appraisal Shortfalls

Whenever the market heats up like this, particularly in the springtime, appraisals invariably come in low. This is simply because there are often no closed comparable sales (comps) that even come close to supporting current contract prices, especially when there are bidding wars. REMINDER: Appraisers can only use comps that close prior to the appraiser’s […]Read More

Appraiser Shortage Makes 14 Day Close Impossible; “Exterior Only” And “Desktop” Does Not Help

The shortage of qualified appraisers is worse than ever for several reasons: Demand exceeds supply. The continued surge in both refinance and purchase transactions has created a situation where the demand for appraisers far exceeds the supply. COVID concerns. Because of COVID concerns, many appraisers are justifiably reluctant to accept orders requiring physical (interior) inspections. […]Read More

Low Appraisals – 5 Options When Appraisals Come In Low

Whenever an appraisal comes in under contract price, we work quickly to consider all options with both agents and buyers, and we can usually resolve appraisal issues within a day if everyone is responsive. Below are five of the options available when an appraisal comes in under contract price. 1. Rebut the appraisal. This approach […]Read More

Appraisers Can’t Ignore Low Comparable Sales; Agents Should Not Either

APPRAISALS COMING IN UNDER CONTRACT PRICE B/C MARKET’S SO HOT We are seeing appraisals come in under contract price more frequently than normal again b/c the market is so hot and buyers are bidding so aggressively. This is not b/c our appraisers are not trying to support contract price; it is b/c appraisers simply lack […]Read More

Comparable Sales Appraisers Can’t Use; Appraisal Reviews

Hot markets foster appraisal issues – every time. This is b/c aggressive buyers in multiple bid situations frequently offer to pay far more for a property than what closed comparable sales can support in an appraisal. If buyers have ample cash, low appraisals are often not an issue, as buyers can simply bring in cash […]Read More

Appraisal Issues – Low Values, Delays & Why; When Summer = Spring

Our Social Media Manager recently noted a lot of comments on social media  regarding appraisal issues – both low values and delays. The conditions that foster these issues are worse than ever right now and I wanted to discuss a few reasons why. LOW VALUES: WHEN SUMMER = SPRING Spring is usually the issue. Appraisers […]Read More

Why Appraisers Often Come In So Much Lower Than Homeowner Estimates

We once had clients who spent dozens (if not hundreds) of hours removing the popcorn ceilings from their $950,000 home. Because they put so much “sweat” into their equity, they were convinced that their home would appraise for substantially more when they were done. But because their neighborhood market had recently softened a bit, their […]Read More

Bigger House Vs. Smaller House +In-Law Unit; Price Per Acre Issues

Several months ago, I blogged about a 3,700 square foot property that appraised for far less than the owner thought it would because it was really a 2,300 square foot main house with a detached 1,400 square foot in-law unit. The property appraised for less than expected primarily b/c the appraiser had to correlate to […]Read More

Why We Say A $2 Million Home Is Worth $999,000; Best Month Ever For Mortgage Rates

“PIWs” REIGN SUPREME “PIW” stands for Property Inspection Waiver or an Appraisal Waiver. We are getting more of them than ever before, making both refinances and purchases faster, easier and cheaper. We are getting them more often now b/c Fannie and Freddie loosened their guidelines in response to the COVID-19 crisis and b/c more and […]Read More

When Appraisers Are Right (Which Is Often)

We have an excellent pool of hand-picked appraisers that I tout often as a competitive edge. I tout them often b/c we used to get burned all the time when we were forced to use giant Appraisal Management Companies (before setting up our own appraiser pool). Several months ago, one of our appraisers came in […]Read More

COVID-19/Mortgage Industry Update

Here are a few reminders and key updates that are warranted (despite some repetition) b/c the overall situation remains so fluid and b/c we are still getting so many questions. MORTGAGE INDUSTRY REMAINS OPEN Most lenders remain open and fully operational and are still funding and recording loans (with most team members working remotely), as […]Read More

Why & When Appraisals Do NOT Equal Market Value

BEATING THE APPRAISAL DEAD HORSE I beat this dead horse more than any other simply because the issue surfaces so often. This week was no exception when a buyer of ours got cold feet when his appraisal came in $25,000 under contract price. This happens from time to time in hot markets whenever there are […]Read More

Two Guaranteed Appraisal Killers: Overstating Square Footage & Including Expensive Personal Property In MLS/Contract

OVERSTATING SIZE BY INCLUDING DETACHED UNITS In September, I blogged about a Realtor who vastly overstated the value of his own home because he included the square footage of his huge, detached in-law unit in his total square footage estimate. His main house/dwelling was only 2,300 square feet while his detached in-law was 1,400 square […]Read More

When to Expect High Appraisal Fees and/or Appraisal Delays

We recently had a Texas transaction involving a large acreage with a 1 bedroom home and an accessory dwelling unit. It took us a few weeks just to find an appraiser willing to appraise the property (even though we shopped it very aggressively), and the fee was $1,000! The delay and the fee caught the […]Read More

Why Agents Need to Share Low Comps Too; When Cat Pee Matters :)

Agents often share relevant comparable sales data with appraisers to help support value. B/c of this we often share basic appraisal guidelines with agents to ensure they share comps that appraisers can actually use. Comparable Sales Appraisers Can and Can’t Use is just one example from a past blog. Comps can’t be too large, too […]Read More

What Constitutes a “Bedroom?” Ceiling Height? Closet? County Records Wrong!

My wife Heejin spoke in front of a brokerage recently and an agent approached her afterward to complain about a transaction we closed over three years ago. The agent was still upset b/c the appraisal came in low. We researched the transaction and found out that the county records and the MLS had the bedroom […]Read More

No Appraisals For Loans Under $400,000; “New Home Premium;” Appraised Value’s Not Market Value

I want to share a few more interesting comments about appraisals today. On Wednesday I blogged about how appraisers can’t ignore comps that don’t support value. The agents wanted us to use dated comps and ignore more recent comps, but appraisers of course can’t do that b/c underwriters and reviewers will see the ignored comps […]Read More

Why Appraisers Can’t Ignore Comps That Hurt Value

The 1990s were good and bad for appraisers. They were bad b/c appraisers had to use analog sources (books and printouts) to find comparable sales; they were not online. They also had to take analog photos and glue them to old fashioned paper reports. The 1990s were good for appraisers b/c there were no appraisal […]Read More

DANGER! Appraisal Waivers Can Disappear!

I recently blogged about the increasing occurrence of Appraisal Waivers. If a particular property is already in Fannie Mae’s or Freddie Mac’s database, it could be eligible for an Appraisal Waiver, meaning no property inspection or appraisal will be required. Some lenders are offering to check for possible appraisal waiver status for particular properties for […]Read More

Appraisal Waivers More Common Now; Here’s Why

Prior to 2016, every mortgage required an appraisal.  That changed, however, in 2016 when Fannie Mae started to offer “Property Inspection Waivers” or “PIWs.” In 2017, both Fannie and Freddie started to offer PIWs for both refi’s and purchases. I blogged about this in early 2018, pointing out two things: PIWs are less common than […]Read More

Why ALL Lenders Must Pay Appraisers Extra and Promptly!

AGENT SENDS COMPETING LOAN OFFICER TO US FOR ADVICE An agent we know well recently referred another loan officer to us to get advice in regard to how to finance a Site Condo (a stand-alone unit on a condo lot) he had listed. The loan officer was having great difficulty obtaining financing for her client/buyer, […]Read More

How Much is an “In-Law” Unit Worth? Interior Access; Less Than You Think

REALTOR MISSES VALUE OF HIS OWN HOME BY $500,000 Years ago I was refinancing a Realtor who insisted his remodeled 3,700 square foot home was worth at least $1.5 million. I was therefore shocked to see the appraisal come in under $1 million. I reviewed the appraisal and quickly realized why it was so low. […]Read More