Showing posts from 2016

An Appraiser's Holiday Wish List

It's a busy time of year. In our large family of 7 kids each year they fill out Christmas Wish lists. It gives us some gift ideas. Of course, not everything on their lists is granted but it is fun to see what they wish for.  The lists have always been in a notebook but this year I put them on Google Docs. It was great. While looking at their lists, I  began to think what would I put on a  wish list as an appraiser. Here are a few things I would wish for:

1. Appraiser Independence - Dodd-Frank did give appraiser's independence and helped separate the direct pressure placed on appraisers to make values. The appraiser has to be an unbiased independent party in a transaction.  Currently, there is some discussion that Dodd-Frank will be eliminated and there is much to be changed. My wish is to keep appraiser independence.  We do not need to go back to where appraisers are pushed to make value.

2. Customary Fees-  Within this past year, much needed fee increases did occur in many mar…

Appraising Rural Properties

We appraise real estate in urban, suburban and in rural areas. Some of the most interesting and sometimes challenging work we do is appraising rural properties. 

Here are a few items to note when appraising the value of rural properties. 

Make Sure to Have a Full Tank of Gas  -  Some of the rural locations we appraise are very sparsely populated and you can go for many, many miles before you come across a gas station.  Nothing would be worse than to run out of gas and have to wait a very long time for your friend or auto service to bring you gas for your vehicle.  We appraise in North Texas where the land can seem to stretch to eternity in some places.                                                                                                                                                                                                                    Bring Your Paper Maps (and maybe even a compass) -    Many of the places that we appraise do not show up accurately in many of th…

Does a Room Have to Have a Closet to be Considered a Bedroom?

We have had these questions asked of us:  Do I have a 4 bedroom home or a 3 bedroom home? Does a bedroom have to have a closet to be considered to be a bedroom?  Does a bedroom have to have a window? What are the requirements for a room to be considered a bedroom?  

Taking a Look at Guidelines and Regulations
First, we will look at what guidelines and regulations have to say about bedrooms.

*FNMA (Fannie Mae) guidelines which apply to most appraisals on residential properties for mortgage lending states: 
The Appraiser must not identify a room as a bedroom that cannot accommodate ingress or egress in the event of an emergency, regardless of location above or below grade 
FNMA 4000.1 Guidelines
There is nothing in FNMA guidelines stating the need for a closet, but that there needs to be ingress or egress in the event of an emergency.  The methods of ingress or egress in the event of an emergency is typically in the form of a window but may also be a door. 
*International Residential Cod…

Balance- Is it Achievable?

Balance is something we all seek.  As a mother of 7, I often find that balance is something I seek but rarely achieve.  Something may happen in the life of one of my children and they will need some extra attention.  As I give that child a little more attention, then another one will soon feel some sort of neglect and will then be in need of attention.  Thus, it is a constant back and forth seeking balance but rarely achieving it.  The same for my work/family life.  There is a constant need to find a balance. I think the desire for balance is something we all seek.  What about housing markets?  What is a balance as it relates to real estate?

Looking at Local North Texas Markets: 
Looking at North Texas, there is an imbalance of suppy and demand. According to Dr. Jim Gaines,  a research economist with the Real Estate Center of Texas A&M University,  for Texas balanced and stable markets are typically around 6 months of inventory.   When the inventory (number of homes for sale) bec…

Are Drones in the Future for Real Estate Appraising?

The National Association of Realtors recently published a blog encouraging real estate appraisers to use drones as a part of the appraisal inspection.  Is this in the future for appraising?  My son is considering starting a drone business so I thought I would ask this question on a few appraiser forums to see the interest for appraisers.   Here are some items of consideration regarding drones and appraising that many appraisers shared:

Reasons why appraisers would not use a drone:

Privacy Issues:  If an appraiser is using a drone in  high-density subdivisions where homes are located very close to one another, the neighbor may take issue with a drone flying in or around their yard.   Many believe that although it is a crime to shoot a drone, there would be those that wouldn't think twice about it if they felt violated or threatened.  Feasibility:  The cost of a drone or drone service would outweigh most of the benefit.  A drone would allow a better visual of perhaps a roof or inter…

5 Ways Relocation Appraisals are Different Than Mortgage Appraisals

You just had an appraisal performed on your home for a refinance and now your company is transferring you to another state.  Why do you need another appraisal?  Do you know the difference between a Relocation Appraisal and a Mortgage Appraisal?  At the DW Slater Company we perform both types of appraisals but we find that not everyone knows the difference between the two.

1.Intended Use
Relocation Appraisal -The intended use is to assist an employer with the transfer of an employee Mortgage Appraisal - The intended use is to assist a lending institution in evaluating risk associated with a loan
The appraisal that you had performed for your refinance has a completely different intended use.  It was for your lending institution for collateral risk evaluation.  The relocation appraisal is for your employer to assist with the selling of your home for the transfer.

2. Report Format
Relocation Appraisal -The relocation appraisal is reported on the ERC Summary Appraisal Report form which is a …

5 Ways to Over-Improve Your Home

We came across this property the other day and as appraisers immediately thought, "Over-Improvement?" We all have wonderful ideas of how we want to improve our property.  When we purchase our home, it may be perfect as it is but many times we will want to improve it. There is nothing wrong with updating or additions but be careful of over-improving your property for the neighborhood where you live.

What is an over-improvement?

"An improvement that does not represent the most profitable use for the site on which it is placed because it is too large or costly and cannot develop the highest possible land value; may be temporary or permanent.  Can be considered a superadequacy and measured accordingly in estimating depreciation " - The Dictionary of Real Estate Appraisal, 4th Edition

Basically, it is when the improvement is too large or costly and would not sell for what was spent in cost. 

Ways to Over Improve:

1. Adding Too Much Living Area-  If you add too much square fo…

Denton County Market Update

Low inventory, short marketing times and price appreciation are what we are seeing in Denton County.  Here is a more in-depth look at the market for May 2016.  Here are the key points:

It took an average of 33 days to sell a home in May.  This is one day less than in AprilThe median sale price for May is $279,500 which is up 5.5% from April and up 5.5% from the same time last year The average sale to list price ratio was 100% The number of sales, or volume was up 1.55% from the same time last yearThere is  currently only a 2 month supply of inventory.  down 4.76% from the same time last year The average price per square foot is $123 which is up 1.65% from last month and up 7.89% from the same time last year
Here are some graphs from the market data in Denton County: 
 The median sale price has increased 71.61% over this 10 year period.

 The average sale price is higher than the median sale price.

The number of REO (foreclosure) peaked at 2008 and has been experiencing steady decline s…

If home prices are up 10% from last year, then why didn't my house appraise for 10% more?

Recently, this question was asked of us, "If home prices are up 10% from last year, then why didn't my house appraise for 10% more?   So we thought this might be a good topic to address.

Currently in many major markets throughout the U.S. there is significant home price appreciation. Does that mean my every house in the U.S. has appreciated in value?  If prices are up 5% in my market from last year does that mean my house is now worth 5% more? Maybe and maybe not. When looking at market trends and data, we must always know the perspective from which we are viewing.

Are you looking at national market trends, regional trends, or the trends applicable to your immediate market or neighborhood?  It is great to take a look at all of the trends.  We can start with the national trends and then "zoom in" to where our property is actually located. 

Here is an illustration: 
National Trends:  Here are the current National Housing Market Trends for April from