APPRAISING IN TODAY’S MARKET

General- Who is reading the appraisal today (buyers, sellers, selling agent, listing agent, brokers, attorneys, loan officers, underwriters, field reviewers, review appraisers). - HVCC (Home Valuation Code of Conduct)

- Adopted by Fannie Mae/Freddie Mac- AMC’s (Appraisal Management Company)- Appraisal Coordinator- NAR is looking to modify or “sunset” this code

- Consider the appraisal inspection the most important showing- Explain to sellers what to expect, and how important the appraisal is- FHA Appraisal

- Appraisal tied to property for 6 months- Utilities must be active- Concerned the 3S’s (Safety, Security, Soundness)

- Gross living area versus square footage (Fannie Mae, Freddie Mac guidelines)

- Single family home versus condominium- Basement - Bedroom/bathroom count (above grade, versus below grade)

- Contracts & Concessions (closing costs, limit 3%, furniture, repair credit)

Comparables- Arm’s Length Transaction- Old requirements- 3 closed comps w/in 12 months- Typical new requirements

- 1-2 closed w/in 90 days- 1-2 closed within 6 months- 1-2 pending- 1-2 active

- Justification for dated comparables, - same building- identical model- lack of similar properties- similar external obsolescence

- External obsolescence (train, highway, airport noise, etc.)- REO’s, & Short-sales (when are they considered a comp?)

- Typically require a condition adjustment- May be utilized to meet lender requirements

Single family homes- Survey (lot lines, easements, encroachments, legal description)- Standard adjustments:

- Date of sale- LOCATION- Site size- View- Design- Quality of construction- Age, - Overall condition- Bedroom/bathroom count- Gross living area- Basement- Basement finishing, - Functional utility- Heating/cooling- Parking- Outdoor space- energy efficiency (green homes, zoned heating/cooling)

- Discretionary adjustments: -Kitchen/bathroom quality/modernization- Fireplaces- Professional landscaping- Amenities (smart-home, wine cellar, home-theater room, coach house, pool)

PUD’s (Planned Unit Developments)- Typically townhouses or suburban homes - Governed by CCR’s- Still an association- Minimal dues- No common insurance- Same form as single family residence - Similar adjustments as single family residence- Condominium townhouse versus PUD townhouse

Condominiums- Standard Adjustments

- Date of sale - LOCATION- Recreation facilities- Floor location- View

- Design- Quality of construction- Age- Overall condition- Bedroom/bathroom count- Gross living area- Functional utility- Heating/cooling- Energy efficient items- Parking- Outdoor space

- Discretionary adjustments: - Kitchen/bathroom modernization/quality- In-unit laundry- Fireplaces- Amenities (audio/visual wiring, roof-rights)

- Project Information: - # of stories- # of elevators- Year built- Construction- Roof material- Total # of parking- Type of parking- # of units- # of units completed- # of units for sale- # of units sold- # of units rented (MI limit of 66%)- # of units owner occupied (second homes included)- # of phases- Developer in control of the HOA- Management company and contact- Any entity own more than 10% of the project- Date of conversion- Status of completion of common areas- Commercial space in the project (20-25% limit)- Special assessment (how much and for what)- Ground rent- Current assessments - Assessments include what

Appraiser packet-what should you provide to the appraiser?- Executed contract- RELEVANT comparables- Project information (condominiums)

- Floor plans- List of upgrades/improvements- Zoning certificate (multi-unit buildings)- Survey of plat (single family homes)- Agent Metrics

- Sales-to-list price ratio- Demonstrate the rate the rate of appreciation/depreciation

Omitted: 2-4 unit properties, vacant land, co-ops

Questions??????