Appraisal Myths & Methodology Part II
By: Donald A. Rousseau, President

1. Myth: Appraisers can establish a fee schedule and charge for appraisals based on the value of a home or a percent of the value conclusion.
   
   Reality/Fact: USPAP guidelines state that this is a violation of the Management section of the Ethics Rule. It states:
   
   It is unethical for an appraiser to accept an assignment, or to have a compensation arrangement for an assignment, that is contingent upon any of the following:
   
   1. the reporting of a predetermined result (e.g., opinion of value)
   2. a direction in assignment results that favors the cause of the client
   3. the amount of a value opinion or
   4. the occurrence of a subsequent event directly related to the appraiser’s opinions and specific to the assignment’s purpose
   
   Methodology: If appraisers want to base their fees on the size of the home, AE: 2000-2500 sq. feet, this is perfectly legal. They also could base their fees on the loan amount, but again, NOT the value conclusion.
   
   
2. Myth: It is acceptable to extract 5 acres from say, a 30 acre parcel, and appraise a home on only 5 of the 30 acres.
   
   Reality/Fact: This is unacceptable by FNMA guidelines, but can be done if the lender requests it and is aware that this is an unacceptable FNMA appraisal practice and their loan cannot be eventually sold to FNMA.
   
   Methodology: The appraiser should cover all bases and inform the lender before proceeding of the condition of the appraisal.
   
   
3. Myth: Urban, suburban and rural classifications are specifically defined with lengthy FNMA definitions and are not subjective.
   
   Reality/Fact: FNMA’s only and simplistic definition is: “urban” relates to property within a city; “suburban” locations relate to the area adjacent to a city, and a “rural” location relates to the country or anything beyond the suburban area.
   
   Methodology: In some instances, the classification of urban, suburban and rural is and can be subjective to the appraiser.  In any classification, a property to be eligible for purchase by FNMA must be residential in nature ---- based on the characteristics of the subject property, zoning and present land use.  FNMA will not purchase on agricultural-type properties (such as farms, orchards, or ranches), on undeveloped land or in land development type properties.
   
   

If you have any questions please contact us at marketing@metrowestappr.com

To ensure that our appraisers are going above and beyond to service the homeowners, we have created a survey for the homeowners to either fill out online or call us. If they do the quick survey their name will be entered into a monthly drawing for a $100.00 dinner gift certificate to the restaurant of their choice.

Here at Metro-West & World Appraisal we are consistently striving for excellence to ensure that we are servicing our clients to our fullest capabilities. If you have any questions call us directly at 888-676-9237 and ask for either Lisa Rahaim or Cristy Thomas.

Top 2% of Market Still Selling As Overall Sales Volume Falls

By Troy McMullen From The Wall Street Journal Online

Despite growing indications of a cooling housing market, one niche continues to sell briskly -- multimillion-dollar homes.

Over the past few months in the overall U.S. real-estate market, more homes have crowded the market and sales volumes have fallen in areas from Houston to Boston and Washington, D.C. Freddie Mac, the government-sponsored provider of mortgage-loan funding, predicts total home sales this year will be down by about 7% from 2005's record levels. Yet one area of the market appears immune to all that: In many locations, homes on the ultrahigh end of the price scale -- those costing $3 million and up -- have been selling in increasing numbers.

More Info Here

National Association of Review Appraisers and Mortgage Underwriters

From the National Association of Review Appraisers and Mortgage Underwriters, in a recent article “House Price Appreciation Slows from Record-setting Pace, but Remains Strong” they gave a list of them by state which is below:

Home Appreciation by State Percent Change in House Price, Period Ending September 30, 2005

We have expanded our Michigan coverage to include Huron and Sanilac County.

To view more of our coverage areas please visit us at www.metrowestappr.com or www.worldappraisal.com.

If you would like to request a packet of information by email or mail please email us at info@metrowestappr.com

Next hot market...think Washington

Above average job and population growth are driving strong home-price gains.

By Les Christie, CNNMoney.com

NEW YORK (CNNMoney.com) - As forecasts for housing price growth have cooled for most of the country, they are calling for booming values in the state of Washington.

More Info Here

Voodoo Or Just Plain Weird?

I arrived a little early to my last inspection. I walked up to the door and rang the doorbell. As I waited for the borrower to answer, I got chill bumps down my arm. It wasn’t cold and there wasn’t a breeze blowing so I’m not sure why this happened.

The borrower answered the door and I introduced myself. As she let me in, she asked if I had gotten chills while I waited. I thought it was weird that she was asking me this, how would she have known? I began my walk through; the borrower followed me around as she told me about a trip she’d taken to Africa earlier that year. She gave elaborate details of beautiful scenery and animals you’d only see in movies. Just as I turned, she reached and it seemed she had rubbed something on my arm. I asked what she was doing and she explained that she had learned the technique of calming people with a touch while in Africa. I tried not to freak out, but this was a little out of the norm, I didn’t think I needed to be calmed down.

So I went on with the inspection. I got to the door that led to the basement, and the borrower stopped me and asked if I could skip that part of the inspection. I explained that I’d have to inspect the entire home in order to complete the inspection. Before I opened the door, she began reciting some sort of phrase as if she was doing some sort of Voodoo. When I opened the door, there must have been 50 or more cats that ran up the basement stairs. I should have left then, but I finished the inspection. I hope she won’t need a reinspection, I don’t think I’ll be going back there!

A few things to think about…

1. Can you cry under water?
2. How important does a person have to be before they are considered assassinated instead of just murdered?
3. Why do you “Put your two cents in”…but it’s only a “penny for your thoughts”? Where does that extra penny go?
4. Why does a round pizza come in a square box?
5. Why is it that people say they “slept like a baby” when babies wake up every two hours?
6. Why are you IN a movie, but you’re ON TV?
7. Why do people pay to go up tall buildings and then put money in binoculars to look at things on the ground?
8. Did you ever notice that when you blow in a dog’s face, he gets mad at you, but when you take him for a car ride; he sticks his head out the window?
9. Why does the alphabet song and Twinkle, Twinkle Little Star have the same tune?
10. Why did you just try singing the two songs above?
    

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"Too many people overvalue what they are not and undervalue what they are."

~ Malcolm Forbes ~