Posts

Are Lenders Obligated To Share Appraisals?

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We often pay for purchase appraisals upfront on behalf of clients for a few reasons. Rush Fees: We pay a large rush fee that we don’t charge our clients and b/c we can’t separate the rush fee from the standard fee, we just pay the entire fee upfront (we don’t want our clients paying the […]Read More

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

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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 – b/c we have to wait for HOAs; (2) Jumbos – b/c underwriting and required appraisal reviews take longer; (3) Complex self-employed borrowers b/c […]Read More

Correlating to Borrower With Lower Score; Paying Over Appraised Value; Not Referencing Inspections

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Here are a few quick reminders. CORRELATING TO BORROWER WITH THE LOWEST CREDIT SCORE We received negative feedback from a frustrated borrower last week b/c we correlated our interest rate quote to her husband’s lower credit score (low 600s) when her score was in the 800s. We of course had no choice, as almost all […]Read More

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

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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. B/c of COVID concerns, many appraisers are justifiably reluctant to accept orders requiring physical (interior) inspections. […]Read More

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

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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

Valuing An In-Law Unit Or An ADU (Accessory Dwelling Unit)

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I touched on this last year a few times but am getting questions again because so many people have built Accessory Dwelling Units (ADUs) as a result of the COVID crisis. HOW MUCH IS MY ADU WORTH? An ADU or in-law or granny flat or outside cottage (or whatever you want to call it) is […]Read More

Comparable Sales Appraisers Can’t Use; Appraisal Reviews

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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

4 Things to Know About VA Home Appraisals

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VA home loans are one of the most common mortgage options among military members in California. The VA loan program offers 100% financing, which means you could buy a home with no down payment. This is a very popular option throughout all of California as we have such a large number of military personal. One […]Read More

When Appraisers Are Right (Which Is Often)

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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

5 Bold Predictions For The Post COVID-19 World; COVID-19 Updates; Reason to Refi

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Forbes Publisher, Rich Karlgaard, published 5 Bold Predictions for the Post COVID-19 World. He imagined what we might see by the Spring of 2021 and predicted the following: A rebounding world economy with a fantastic global growth rate of 4%. Fully resumed global travel b/c human nature makes people want to travel no matter what. […]Read More

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

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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

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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

Appraisal Conditions and Health & Safety Issues to Watch For!

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Realtors are often frustrated about “condition” and “health & safety” issues that get called out by appraisers, and they come to us for guidance. They obviously want to avoid getting conditions called out by appraisers that will either cost too much to repair, delay closings or kill deals altogether. Our Appraisal Manager, Jennifer Muzzall, provided […]Read More

When Zillow Misleads Homeowners

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First, I reluctantly have to admit that Zillow really does have impressive algorithms, that sometimes yield surprisingly accurate results. But, Zillow also often badly misleads homeowners, creating huge issues for lenders and agents alike. A few years ago, a friend of mine was irate when his appraisal came in $75,000 lower than Zillow’s “Zestimate®.” But […]Read More

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

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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 ALL Lenders Must Pay Appraisers Extra and Promptly!

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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 a Huge Lot Worth? Appraisal Adjustments for Lot Size

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In response to this blog about the value of in-law units, I received numerous other appraisal-related inquiries including a few questions about lot-size. Agents are often frustrated b/c they think appraisers ignore or underestimate the value of larger lots. But, there is much more to the story. NEED COMPS IN SAME OR SIMILAR NEIGHBORHOOD TO […]Read More

Appraisers Need Ratified Contracts & Comps That Close Prior to Inspection

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APPRAISERS NEED RATIFIED CONTRACTS This is a reminder that we need a fully ratified contract (signed by all parties) before we can order an appraisal. This is a regulatory requirement and many appraisers won’t even accept orders without ratified contracts. Appraisers need ratified contracts so they can review all the terms within it to see […]Read More

Comparable Sales Appraisers Can & CAN’T Use

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Realtors often send our Appraisal Manager comparable sales (comps) to review for their upcoming appraisal appointments or for rebuttals when appraisals come in low. The problem is that we often cannot use the comps b/c they are so far outside of standard appraisal guidelines. This happened recently when an agent sent us comps that were […]Read More

Repairs Prior to Close or Prior to Owning the House

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Appraisers often call out condition, health and safety, or repair issues that need to be addressed prior to close. Examples include missing floor coverings or water-heater straps, or peeling paint. If the repairs are minor, there is usually not a problem. Significant repairs present problems, however, because sellers often are unable to do them (REOs, […]Read More

When Zillow Misleads Homeowners! Why It Matters & What to Do?

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I reluctantly have to admit that Zillow really does have impressive algorithms, that sometimes yield surprisingly accurate results. BUT, Zillow also often badly misleads homeowners, creating huge issues for lenders and agents alike. A few years ago, a friend of mine was irate when his appraisal came in $75,000 lower than Zillow’s “Zestimate.” But Zillow […]Read More

What’s The Difference Between an FHA and VA Appraisal?

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Agents and borrowers alike often find the appraisal process confusing and opaque – it’s why we consistently field questions on what appraisers look for when inspecting a property and how agents can best prepare. Not only can appraisers’ opinions on value make or break a deal, but they also play a crucial role in determining […]Read More

Appraisal Horror Story; Appraisal Success Story! “Appraisal Manager”

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APPRAISAL HORROR STORY Back when we were in the Broker Channel (when we sent loans to outside lenders for underwriting), we ordered a purchase appraisal in a high-end Bay Area community called Orinda. The lender forced us to order appraisals through a nationwide Appraisal Management Company that kept most of the appraisal fee itself and […]Read More

Adverse External Influences On Appraisals – Explained

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Adverse External Influences “Adverse external influences” are structures or entities near a property that negatively affect its value. Appraisers often use the phrase “External Obsolescence” when describing these influences. Adverse influences include freeways, busy arterial through-streets, railroads, BART or mass transit trains, cemeteries, schools and commercial buildings or establishments. Real estate agents involved in transactions […]Read More

What Realtors Can Say To Appraisers- Anything; Comp Guidelines

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Lenders are not ever allowed to communicate directly with appraisers. We are only allowed to order appraisals through our Appraisal Management Company, which in turn contacts the appraiser. Realtors, however, can communicate directly with appraisers and we highly recommend it. Realtors often ask us what they are “allowed to say.” Our answer is: “anything, as […]Read More

Warehouse Store Mortgage Screw Ups; Warning for Borrowers and Agents

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One of our borrowers didn’t like the news we gave him so he went to a major warehouse store to get his mortgage. And – the entire situation is a great lesson on why Bay Area buyers should not go to a warehouse store to get a mortgage. :) Appraisal Issues: They used a national […]Read More

More Purchase Tips For Refi Guys; Giving Away JVM’s Playbook

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On Friday, we provided tips to help refi guys close purchases now that rates are up. The tips included rush appraisals; reviewing contracts for addenda, reports and condition issues; and hiring a skilled appraisal manager. Several people, however, chastised us for “giving away JVM’s playbook.” We responded by saying: A. We always like to help; […]Read More

Created Full Time Appraisal Manager Position at JVM; Necessity & Scope

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We recently created a full time Appraisal Manager Position at JVM, devoted exclusively to JVM’s appraisals. We are the only lender with an Appraisal Manager with this scope of duties and training. It is absolutely necessary, however, b/c appraising has become so complex, due to guidelines, shortages, CU scores, and the lack of comps in […]Read More

Flips Defined; Pay Off Consumer Debt to Qualify; Available Weekends!

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A few reminders: 1. JVM Works Weekends. Here are a few quotes we got over the weekend from a favorite Berkeley Realtor: “Thanks for the speedy response!” and “Love working with a Lender who works on weekends. :)” We get similar quotes every weekend b/c real estate often takes place on weekends. We always have […]Read More

Great Email Illuminates Appraisal Issues; Business Decisions; Costs

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Our Office Manager, Tiffany Nordgren, sent the below email last week. The email is excellent b/c of its clarity, but also b/c it illuminates many issues we currently face. 1. Appraiser Shortage. There are too few right now and everyone has to pay extra to get orders picked up. 2. Cost for Better Service: We […]Read More

Post TRID Turn-Times; Contingencies Same; COE 7 Days Longer

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As mentioned, now that TRID is in effect we are requesting 21 day escrow periods instead of our usual 14 day escrow periods. We are working to move back to 14 day closings as soon as possible. TRID, however, is not affecting contingency periods. We are still 8 days for loans and appraisals. We can […]Read More

How To Buy A Flip – Property Bought & Re-Sold Within 90 Days

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We have been seeing “Flips” surface again lately. Flips are properties that are purchased and re-sold within 90 days. Lenders go by “contract date” and not close of escrow. Hence, if you buy a property on October 1st, your contract to re-sell it must be dated after January 1st, to avoid “flip” status. Anytime a […]Read More

Appraisals Are Not Public Record; FHA Sometimes

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Appraisal Are Not Public Record We “inherited” a transaction from another lender today b/c their appraisal came in too low. That lender tried to convince the Realtors, however, that the low appraisal was effectively “public record” and that it would do no good to go to a new lender (the current lender was hoping to […]Read More

“Flip” Rules Again – Selling 90 Days After Purchase

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We still see the occasional “Flip” surface, although not nearly as often as we saw them in 2010-2012. A “Flip” once again is a property that is purchased (usually by investors) and re-sold within 90 days. FHA will not finance Flips at all. Conventional and Jumbo lenders will finance Flips, but they require two appraisals. […]Read More

Loans Are About Rules/Regulations & Not About “Making Sense”/Logic

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We have a very strong borrower whose loan is held up right now b/c the appraiser is unable to find rental data (for a rent survey) that is necessary for an FHA triplex appraisal. We and the borrower (and the appraiser) are extremely frustrated b/c we all know market rents are much higher than available […]Read More

New CU Tool For Appraisals on 1/26: Much Ado About Nothing?

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We are getting asked constantly about the consequences of Fannie/Freddie’s new Collateral Underwriting (CU) Tool coming into play on Jan. 26th. It is risk management software that will pull a list of 20 comparable sales and rank them in order of “risk.” Everyone’s fear is that every transaction will be delayed and appraisers will be […]Read More

Paying More Than Appraised Value? Why? Appraisal Not Market Value

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Yesterday we pointed out how borrowers with large down payments sometimes use FHA or VA financing when appraisals come in low. Several realtors asked why borrowers are willing to pay over appraised value. There are several reasons that we have observed: (1) the buyer is a 27 year social media employee with $11 million in […]Read More

FHA Appraisals – Only One Is Allowed;Value Can’t Change w/ New Lender

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We had a borrower leave us for an online lender about a month ago. The online lender screwed up the loan, and the appraisal came in low (despite ample comps that supported value). The borrower came back to us with 8 days left to close escrow, and we could have closed on time but for […]Read More

Why “Rush” All Appraisals? 5 Day Contingencies; Value

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At JVM we order every purchase appraisal as a “rush” and absorb the rush-fee ourselves. There are two reasons for this: (1) 5 Day Appraisal Contingencies: We typically get appraisals back in 3 to 4 days, and this allows us to always remove appraisal contingencies in 5 days. We know that doing so makes purchase […]Read More

We Accept Appraisals Transferred From Other Lenders

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We have several lending sources that accept transferred appraisals (appraisals ordered by or prepared for other lenders). This is significant b/c for years no lender would accept another lender’s appraisal, especially since HVCC guidelines went into place. Not having to order a new appraisal for a borrower seeking JVM’s superior rates, service or loan programs […]Read More

Appraised Value Is Not Market Value; Solution?

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We have a transaction in which two buyers (both are clients of ours) are more than willing to pay $1.2 million for a property in Oakland with an appraised value of only $950,000. There are probably more buyers in the wings willing to pay a similar price. The appraisal came in so low b/c of […]Read More

FHA Properties Don’t Need to Be In Better Condition Than Conventional

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A borrower in need of FHA financing called this week to ask about a property she wanted to buy. She was concerned that the property’s sloping floor and potential foundation issues would prevent her from getting FHA financing. We pointed out that the sloping floor and foundation issues, if clearly visible, will prevent her from […]Read More

Appraisals Good for 90 to 120 Days; Caveats

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We sometimes have closings severely delayed b/c of repair issues, title issues, or unexpectedly large liens surfacing. In these situations, we are invariably asked how long the appraisal will remain valid. The general answer for conventional loans is 90 days. Loan documents must be drawn before the appraisal is 90 days. FHA lenders will draw […]Read More

What Realtors Can Say To Appraiser – Anything; Comp Guidelines

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We, as a lender, are never allowed to communicate with appraisers in any manner. We can only order appraisals via a management company or some other independent “go-between.” Realtors, however, can communicate with appraisers and we highly recommend it. Realtors often ask us what they are “allowed to say.” Our answer is: “anything, as long […]Read More

Necessity of Rush Appraisals; JVM Pays Rush Fee

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We order ALL of our appraisals as rushes. The extra fees for the rush-appraisals are substantial, but well worth it. JVM absorbs all extra fees. Our borrowers only get charged standard appraisal fees. We order and pay for rush appraisal fees b/c we: (1) get better quality work; (2) are more likely to get an […]Read More

Rush Appraisals No Matter What – Good for Values & Contingencies

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We order all of our appraisals as a “rush,” absorbing the $150 to $250 rush fees ourselves; we do not charge the borrower. The reason is two-fold: (1) the extra fee tends to garner better quality work and a higher likelihood that the appraisal will come in at value/contract price; and (2) we want our […]Read More

Tighter Contingency Periods Necessary in Hot Markets; 5 to 7 Days

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We beat this dead horse often and are doing so again b/c we are surprised by the number of buyers that continue to make offers with excessively long contingency periods. Our Realtor-partners constantly receive offers in multiple-offer situations with 17 and 30-day contingency periods. These buyers lose out again and again and wonder why, but […]Read More

Benefits of Smart/Friendly/Motivated Realtor: Higher Appraisal

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The appraisals associated with our refinance loans come in lower than those associated with our purchases. This is partially because of our current hot market and because most appraisers really do make a good faith effort to support the contract price in their appraisal report. But it is also largely because our top agents do […]Read More

Refi Appraisals do NOT affect Property Taxes; Refi out of PMI

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Many of our borrowers who are putting down less than 20% hope to refinance out of PMI (or out of their purchase-money-2nd) in 4 to 6 months. These borrowers hope to be able to take advantage of the many high-priced pending sales that cannot be used in appraisals now b/c appraisers only correlate to closed […]Read More

Repairs Prior to Close or Prior to Owning the House

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Appraisers often call out condition, health and safety, or repair issues that need to be addressed prior to close. Examples include missing floor coverings or water-heater straps, or peeling paint. If the repairs are minor, there is usually not a problem. Significant repairs present problems, however, because sellers often are unable to do them (REOs, […]Read More