Posts

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

Appraisal Relief’s Here, But Limited; Purchase Appraisals Going Well; Interest Rate Updates

Fannie and Freddie released “Appraisal Relief” guidelines yesterday that consisted primarily of waiving interior inspection requirements. They agreed to accept “exterior inspection” and/or “desktop appraisals” in lieu of full, traditional appraisals. But, the relief is turning out to be more limited than we hoped. LIMITATIONS Appraisal relief is only available for conforming (Fannie and Freddie) […]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

Top Five Options For Low Appraisals

Whenever an appraisal comes in under contract price, we work quickly to consider all options with both agents and buyers.  We can usually resolve appraisal issues within one business 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

Internal Appraisal Panel; Why We Left the Broker Channel; Never Pushing Values

APPRAISER WHO LIVED 100 MILES FROM SUBJECT PROPERTY In October, I shared an appraisal horror story about a huge Appraisal Management Company hiring an appraiser who lived 100 miles away from our subject property. The appraiser crossed a major freeway to find comparable sales in a vastly inferior neighborhood, and came in $200,000 under contract […]Read More

Appraisal Condition/Health & Safety Issues to Watch For!

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

Condo vs. Townhome vs. PUD

This is another reminder that condos are not distinguishable from PUDs (Planned Unit Development units) by appearance alone. Attached side-by-side two-story units that all touch the ground can be zoned “CONDO” or “PUD.” Complexes with units that “float” (that do not touch the ground) will almost always be zoned Condo (PUDs must touch the ground). […]Read More

Curb Appeal for Marketability and “Appraisability”

BAD LANDSCAPING COSTS SELLERS $200,000 I live near a home that was on the market for nearly three months before it finally ended up selling for over $200,000 less than its original list price. In contrast, I live near another home that is the same size as the home I just referenced, and it recently […]Read More

Five 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.  We can usually resolve appraisal issues within one business 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

Why Underwriters Request Inspections; Handyman Before Appraiser

We recently had an “as is” transaction blow up b/c the appraiser called out significant wall cracks and dry rot. Appraisers can turn a blind eye to minor deferred maintenance, but they have to call out major (visible) items or they will lose their license. When our underwriter saw our appraiser’s photos, she asked for […]Read More

Importance Of Own Appraisal Panel! Why We Left The Broker Channel

We used to navigate the broker channel with amazing efficiency b/c we knew every lender’s guidelines and systems so well, and our volume and reputation allowed us to curry many favors. Reminder: The “broker channel” is one where loan officers do not work for a specific mortgage bank but instead submit their loans to multiple […]Read More

Rent Backs; Gift of Equity; Appraisal Seasoning; 3% Down vs FHA

Here are a few “Mortgage Minders.” Rent Backs. Most lenders allow sellers to “rent back” the home they just sold for as long as 60 days. If the term exceeds 60 days, however, “owner occupancy” comes into question for the buyers. Gift of Equity. Down payments can be a “gift of equity” alone (with no […]Read More

Danger! Dry Rot! This Deck Will Kill You! (Condition Flags)

We recently had an appraiser visit a condo for an “as is” purchase appraisal, and there was a large sign stapled to the deck that said: “Danger. Dry Rot. Do NOT Stand On Deck!” Needless to say, the “as is” deal came to a screeching halt until the issue could be addressed. This was a […]Read More

Appraisal Issues; The Dreaded CU Score

High “CU Scores” are causing appraisal issues more than ever, and creating a lot of confusion. Fannie Mae now requires a “Collateral Underwriting” (CU) Score on every appraisal. This score reflects an automated risk assessment of the appraisal based on county records, comparable sales in the area, and appreciation of the subject property. If the […]Read More

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

Several realtors have 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 old social media employee with $11 million in stock options, and money is not a significant concern; (2) the buyer is getting a massive gift from relatives, […]Read More

Options When Appraisal Comes in Low

We have a highly skilled & fair appraisal panel, but in today’s hot housing market, sale prices are sometimes above the value an appraiser can fairly attribute to a home. Here are a buyer’s options when an appraisal comes in lower than the purchase price: 1. Renegotiate a price reduction with the seller. This option […]Read More

High Loan-To-Value Financing for Well-Healed Borrowers In Hot Markets

We often discuss high loan-to-value (LTV) financing (90% to 96.5%) with borrowers who would otherwise put down 20% or more. This is b/c they are making offers in very hot markets where there are simply not enough comparable sales to support the expected contract price. High LTV financing allows borrowers to put less money down […]Read More

Appraisal Issues and Reviews More Prevalent in 2016

We are seeing appraisal issues surface much more frequently lately. These include many more underwriter requests for 2nd appraisals or formal appraisal reviews, as well as low appraisals. A major reason for this is Fannie Mae’s increased scrutiny of appraisals in areas with a lot of appreciation. Fannie’s automated underwriter (DU) now calls for an […]Read More

Condition: Old, Tired, Worn Is OK; Health/Safety/Structural Not OK

We recently had a Realtor call us about a property that was formerly used for the “production of medicine” (aka a pot farm). He asked whether the appraiser would call out the holes in the floor (for ventilation and grow lights) and the damage caused by the angry guard dog. The answer is yes, so […]Read More

Smart Appraisers Essential; Using Local Companies/Appraisers

“The unique nature of the subject property necessitates going outside of the typical market area of influence to garner adequate comparable sales data.” In 1994, a really smart appraiser taught me to say that in appraisals whenever it was necessary to go outside of the neighborhood or a 1 mile radius to get comps to […]Read More

Collateral Underwriter & Appraisal Reviews; Bad News/Good News

Last winter when Fannie Mae’s Collateral Underwriter surfaced, there was panic (and yes, it was panic) in the industry about what it would do to appraisals and closing-times in general. The panic of course turned out to be overblown and unjustified. The situation was much like TRID is now. Our industry seems to face many […]Read More

Two Appraisals Instead of Appraisal Review; Rush Fees Too

We spend as much as $15,000 per month on extra appraisal fees that we as a company absorb and do not pass on to borrowers. One of these costs is “Rush Fees.” We order all appraisals as “rushes” and we absorb the extra cost, for several reasons: (1) we think we get better quality work […]Read More

Price Per Square Foot Analysis? Why Appraisers Don’t Use It

Realtors and buyers often rely on a “Price Per Square Foot” analysis, but appraisers often cannot for a variety of reasons. This is a message we repeat from time to time. If comparable sales involve similar sized homes, of similar age, on similar lots, then a “price per square foot analysis” works. But, if a […]Read More

Strict Appraisal Rules For Comparable Sales

Realtors often provide us with comparable sales that we (when doing rebuttals) or appraisers cannot use b/c they do not comply with appraisal guidelines. Here are some basic Comparable Sale Guidelines that we re-post periodically. a. Size: Comps need to be within 20% of the size of the subject property. For example, we usually cannot […]Read More

Lenders ALWAYS Correlate to Lower of Contract Price or Appraisal

One of our borrowers has been in contract to purchase new construction in Oakland for almost 9 months. His plan was to put down 10%. Now that the property is ready, however, the property could easily be appraised for $100,000 over the contract price. The buyer and his agent were ecstatic b/c he now has […]Read More

Unpermitted Space is OK – No Value; No Health and Safety Issues

One of our Realtors asked us about a house in Oakland with 1,800 square feet and 4 bedrooms and 2 baths (per MLS). The problem is that the county records indicate that the house has 1,100 square feet with 3 bedrooms and 1 bath. The house’s lower unit (1 bedroom and 1 bath) was built […]Read More

Appraisal Comes In Low? Options

“Remember all those smart folks who said rates were going higher this year? Well, so far they’re dead wrong”This quote is from Rob Chrisman’s mortgage blog: “Remember all those smart folks who said rates were going higher this year? Well, so far they’re dead wrong” Here are a buyer’s options when an appraisal comes in […]Read More

Appraised Value Higher than Contract Price? Irrelevant

We are financing a condo purchase in Newport Beach and the appraisal came in $13,000 over the contract price. This was a big surprise, given the strength of the current market. The buyer, of course, wanted to know if he could use the higher appraised value to push his loan-to-value ratio down to 75% and […]Read More

Waiving Appraisal Contingency? More Down or Switch to FHA

We had many multiple offer situations last year that required borrowers to waive appraisal contingencies. Borrowers who waive appraisal contingencies have several options if an appraisal comes in below the purchase price: 1. Order a new appraisal with a different lender. This option is often ineffective, however, if there are simply no adequate comparable sales […]Read More

Value Is Clear But Comps Are Not; Defense of Appraisers

We recently had a refi client whose house was unequivocally worth over $800,000. We knew this b/c his neighbor’s near-model-match home was “pending” at $805,000, after being on the market for less than a day. Our refi client needed a $750,000 appraisal to obtain the ARM financing he desired, but we could not come close […]Read More

Water Heaters Double Strapped

We recently had a conventional appraiser call for a re-inspection because the water heater was not strapped down. The only problem is that there was no water heater; the property has a “tank-less” water heating system. This story is not, however, about mindless appraisers. It is a reminder that both FHA and Conventional appraisers look […]Read More

“The Great Flood” – Inspiring Story!

We referenced a rush purchase last week that involved a property that was totally flooded by the departing seller just prior to close. We never told the whole “inspiring” story though. As we mentioned, the seller moved out and left water running in the laundry room, flooding a large portion of the house. The “Great […]Read More

Appraisal Horror Story That Could Have Been Avoided Easily

Our top producing realtors take appraisals very seriously. They zealously ensure inspection dates are set promptly, and they often show up to meet the appraiser whether they are listing or selling agents. They often show up with comps in hand and a friendly smile even if there is a lock-box at the house or a […]Read More

“High Appraisal” Irrelevant with Purchases; LTV Correlates to Contract

We sometimes get appraisals for purchases that come in much higher than the contract price. This is often the case with short sales that were negotiated in an appreciating market many months before the appraisal is ordered. Unfortunately, appraised values that come in higher than the contract price do not allow for better financing terms. […]Read More

“Streamline” Refinances for FHA Loans – No Appraisal Required

An FHA Streamline Refinance is a refinance of an FHA loan that requires NO appraisal. Many borrowers with FHA financing and limited or no equity believe they are unable to refinance. This is not the case because Streamline Refi’s do not require equity. We are locking in no cost, FHA Streamline refi’s in the low […]Read More

Broker vs. Bank? Broker Wins – Examples Below

A few weeks ago, one of our Realtors frantically called b/c the purchase of his listing blew up after 30+ days in escrow. The buyer’s lender, a direct-lending “bank,” had pre-approved the buyer. But at the 11th hour, the lender/bank denied the loan b/c the buyer had too little savings and late payments after a […]Read More

Appraisal Comes in Low – Increase LTV and PMI to Make Deal Work

The current “hot market” results in purchases with prices that simply cannot be supported with appraisals. And because sellers often refuse to come down in price when an appraisal comes in low, we often propose the “solution” of simply increasing the loan-to-value ratio and PMI rate to save a transaction. For example: If a borrower […]Read More

Market Is Hot! Appraisers Are Not! Valuation Issues?

Because the market is as hot as it is now in many areas, we are having appraisal issues. Many appraisers are too unmotivated or too ignorant to correlate to the “current” market by pointing out the number of multiple offers or by making a case for the use of pending sales for “comps”. We understand […]Read More

We Speak Spanish, Korean, Mandarin; Fannie Not Rational

JVM is multi-lingual. We speak fluent Spanish, Korean and Mandarin. We have a $250,000 loan and a $700,000 appraisal; the loan to value is 35%; the borrower’s credit is perfect and his debt ratios are near single digits. Yet, Fannie Mae is forcing us to pay $140 for an appraisal review because the appraisal came […]Read More

“Charming” the Appraiser to Get Value

We have a $915,000 FHA Purchase of a Duplex in Rockridge (Oakland). The appraisal was a huge concern because there are few comparable sales to “bracket” the upper end of that market. The buyer’s agent, however, met the appraiser at the property and pretty much charmed the daylights out of her, doing everything short of […]Read More

“Appraised” Value is often NOT “Market” Value

There is a transaction involving a house in Antioch that was listed for $249,000. There were multiple offers for the house, and all of them were over $220,000. In light of the fact that numerous, arms-length, knowledgeable buyers were willing to pay over $220,000, the “market value” is clearly over $220,000. The problem is that […]Read More