Tagged: comparables

The One-Mile Rule: Prudent Policy or Modern Day Redlining? 1

The One-Mile Rule: Prudent Policy or Modern Day Redlining?

…whether through redlined maps or implicit “one-mile rule,” the result can be undervalued properties in historically marginalized neighborhoods.  Throughout the history of mortgage banking and lending in the United States, underwriting policies have significantly influenced the appraisal process for home purchases and refinances. Appraisers must follow underwriter appraisal review guidelines meticulously to ensure their appraisal reports are accepted by the lender. Unfortunately, in the past, these policies became the basis for redlining, wherein certain communities were systematically denied access to mortgage credit. In this article, we delve into the historical context of underwriting policies and their influence on the appraisal...

GLA Adjustment Process: - Adjusting the Full Difference vs. a Threshold Amount 79

GLA Adjustment: Adjusting Full Difference vs a Threshold Amount

Appraisers, on Thursday, before the Memorial Day holiday, I circulated across the US an email asking for response to a simple two question survey about how you “adjust” the GLA square footage between the Subject and Comparables. The questions: adjust 100% of the square foot difference, or adjust the difference after a ‘threshold’ square foot amount (meaning not the full 100% difference). I received a respectable number of responses compared to emails sent out, and also posted to 3 different web forums, nearly 200 replies. So that’s enough to validate the percentage of both responses, and report the trends. As...

Woke 'Bounty' Bill Will Chill Speech of New York Appraisers 8

Woke ‘Bounty’ Bill Will Chill Speech of New York Appraisers

A bill being crafted by the New York state Senate’s Finance Committee would, in effect, place a $2,000 bounty on the head of any heretical real estate appraiser in the Empire State who dares conclude a value that fails to satisfy a seller, serial refinancer or commissioned broker in a deal. Vulnerable buyers, who could be paying off inflated loans based on coerced values, would simply have to live with it. If enacted, the bill would authorize fines to be levied on appraisers for a new category of thoughtcrime – something called “appraisal discrimination.” Half the proceeds from the fines...

Freddie's Study, NPR Story Recall Notable Academic Hoax 10

Freddie’s Study, NPR Story Recall Notable Academic Hoax

NPR topped the online edition of its article with the headline, “Black and Latino Homeowners are About Twice as Likely as Whites To Get Low Appraisals.” The problem? Freddie never called the appraisals “low.” While the Freddie Mac study finds no evidence of undervaluation, the NPR story about the study somehow does. Almost 30 years ago, Alan Sokal, now a professor of mathematics at University College London, perpetrated a memorable hoax. He submitted a pseudoscientific article to a cultural studies journal called Social Text. By design, his paper was strewn with nonsense. Titled “Transgressing the Boundaries: Towards a Transformative Hermeneutics...

Hit Pieces & Diatribes Against Appraisers Based on Census Tracts 15

Diatribes Against Appraisers

What’s even more frustrating to me is none of the well-known appraiser organizations have offered any public rebuttal to any of these hit pieces, or explained how the appraisal process works as a way to defend appraisers… Census Tract data delineating RACE of the population is the only ammunition the people doing these hit pieces can use to attack appraisers. Appraisers, this is a long article but it’s important, as it reveals how you are being discredited in the work you do. Yet, ‘we’ must begin doing some introspection of what we are or have been doing, and make necessary...

Remove Predominant Price from the New Forms 16

Remove Predominant Price from New Forms

Something that has ‘stuck in my craw’ or ‘frosted my cookies’ for years is the nonsense about stating a specific “PREDOMINANT” price for neighborhood homes. And then being forced to explain why the Opinion of Value is not precisely that number, and if not, why not. Real estate is IMPERFECT. Properties, especially comparables, seldom, if ever, sell for the very same or extremely similar prices. If that is the case, how can there be an exact “PREDOMINANT” figure? The possible exception to this are highly dense urban developments where the new construction homes are cookie cutters, and the builder sells...

Fannie Mae Bullies Lenders, Ensnares Appraisers in Farcical Probes 13

FNMA Ensnares Appraisers in Farcical Probes

You feel like Fannie Mae is simply trying to get rid of appraisers. A lot of appraisers feel that way… “Even amidst tragedy there is sometimes farce,” wrote author Daniel Prokop. Unleashing tragedy and farce in equal measure, mortgage giant Fannie Mae is using its muscle to coerce lenders to repurchase early COVID-era loans. Fannie apparently deems them now too risky for its portfolio. As a ploy, say observers, Fannie is generating automated appraisals similar to Zillow’s “Zestimates” and using them to undermine appraised values in loans it wants to offload. Fannie’s automated system then sends unsigned boilerplate complaints to...

A Push to Artificially Raise Property Values Only for Certain People 34

A Push to Artificially Raise Property Values

Now the effort is AGAIN to have ‘us’ artificially raise property values. But the push this times seems to be “only for certain people. A new press release from Class Valuation, one of the largest US based AMCs, scampered across my office threshold on 5/17/22. You can read it here in this link: Class Valuation Appoints EVP Of Valuation Modernization – NMP But if you don’t want to muddle your brain cells very much, here are the highlights: A new CV Executive Vice President has been hired to “focus on removing bias from the “equation” in appraisals.” I added the...

Census Tract Info Used Against Appraisers 5

Census Tract Info Used Against Appraisers

“Census tract boundaries do not necessarily define the subject’s market…” Appraisers, of all the issues I’ve written about or questioned since 2006, this topic about your knowledge of, and concern about, Census Tracts has overwhelmingly been the largest response ever, several hundred within just a few hours of posting!  To refresh, the questions were these: Do you know where the Census Tracts boundaries are in the areas you work? When you research and select comparables for your reports, do you pay any attention to Census Tracts? Do you know the racial composition of Census Tracts in the areas you work?...

Sales Comparison Approach is Racist, as per Academics 26

Sales Comparison Approach is Racist

“…the modern appraisal industry perpetuates racial inequality through its continued use of the “sales comparison approach”… the sales comparison approach persists as the dominant method of assessing home value… the sales comparison approach — the most used method for contemporary residential appraisals — perpetuates inequities through maintaining historical hierarchies and current racialized definitions of comparability…” Appraisers, here’s a YouTube video that you MUST view. This person’s, Dr. Elizabeth Korver-Glenn, PhD, work is one of the key reasons why there is so much chatter about racist appraisers in the US. Her discussion of her book ‘Race Brokers‘ begins at the 8:30...

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