Appraisal Stuff

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What is the substance in the pictures below? How would you describe it if you were telling a friend about the images? Have you ever encountered a property like this before? If you are a real estate agent, have you sold something similar? If you were planning to purchase a fixer-upper in the Sacramento Region (or elsewhere), would a blackish-greenish substance like this deter you from entering contract?

When appraisers come across issues like this, one would think we’d simply call the substance “mold”, but that’s not the case. The truth is that since a real estate appraiser is not a fungus or mold specialist, it’s important to not speak definitively about something that another licensed professional should be the expert on. Moreover, what if the substance was not just mold caused by excessive moisture damage, but ”toxic mold”?

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So what do appraisers say when encountering properties with an issue like this? Well, until we get clarification or a definitive pronouncement from a licensed mold professional, we simply describe the substance in words similar to “an unknown blackish-greenish substance”. When we do find out what the substance is, then we can better determine the impact on market value depending on cost-to-cure and the reaction in the marketplace to the existence of such a substance.

On Fannie Mae’s 1004 Appraisal Form, real estate appraisers are asked to identify any physical deficiencies or adverse conditions that might affect the livability, soundness or structural integrity of a property. The blackish-greenish substance in the photos above might potentially impact livability, right?

For further reading on mold, see the following links. You are welcome to suggest a link or share a story above in the comments sections.  Thank you to an appraiser colleague who provided these images to me out of his work file.

Mold Links: An Unknown Blackish-Greenish Substance


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I’d like to take a few moments to reflect on my favorite appraisal assignments of the year. Maybe I’m jumping the gun a bit since 2009 is not quite over, but that’s okay. I won’t get specific about addresses or location because I take client confidentiality very seriously.

Top 10 Favorite Appraisal Assignments of 2009

  1. water-bill-few-easy-steps-200X200Facuets Left On:  I appraised a bank-owned property in Solano County. It was a very nice property, but unfortunately all faucets and spickets were left on (with clogged drains), so there was extensive water damage. It was unclear if the damage was done by the disgruntled home owner or a vandal.
  2. oak park kj imagery former starbucksOak Park Fixers:  This year I appraised quite a few fixer properties in the Oak Park area of Sacramento that were purchased by an investment group, re-habbed, and then re-sold on the open market to first-time home buyers. It’s nice to be a part of a project where the end result is good for the community.
  3. 008Vacant Subdivision Land in Sacramento:  Acting as a property tax consultant, I valued two parcels in Sacramento County under the supervision of an AG (Commercial Appraiser). These sites were scheduled to be finished out as a subdivision, but then the market burst and subdivision building virtually stopped.
  4. imagesCA9RGC87Spring Water & Cesspool:  I appraised a house in Placer County that was on spring water and a cesspool (as opposed to a well and septic tank). Do you think this would have an impact on market value? How much of a price discount would it take for the typical buyer to look over an atypical feature such as this to purchase the property?
  5. Dilapidated Fourplex:  This property was interesting because it had repeated damage from squatters. I had to climb through a window to inspect one of the units too, and I cut my finger on broken glass (that made me remember this property even more).
  6. fixer-property-lundquist-appraisalUpgraded Duplex:  The residential-income market in Sacramento saw a huge decline in value over recent years. All of the latest sales in this particular neighborhood were fixers. So what is a bright and shiny upgraded non-bank-owned duplex worth in a marketplace of REO fixers?
  7. city-thumbnailRancho Cordova Property:  I’ll be honest. Since my office is located in Rancho Cordova, it sure is nice to get local assignments in the same city. I don’t mind at all driving to other counties, but it’s a great thing to travel a mile from the office to take care of business. My business in Rancho Cordova definitely increased this year.  
  8. Divorce Appraisals:  I do work for home owners and attorneys during a divorcedifficult time of life. It was a pleasure to provide excellent service to home owners in need this year and at least make the appraisal process smooth in the midst of a challenging situation. I grew up in a divorced home and I know it’s not an easy time of life.
  9. Pre-Listing Appraisals for Local Agent:  I am a realtor logohuge fan of working with local Realtors and it was a pleasure to establish a new working relationship with a particular agent who began to rely upon my knowledge and services this year. This year I had more referral work from Realtors and that’s a wonderful thing!!! I am also really grateful to be more connected to some stellar local real estate agents on Facebook and Twitter too.
  10. imagesCA42V1MYRipon New Subdivision:  There was nothing terribly complex about this assignment, but I really felt like I did a solid job on this appraisal in Stanislaus County and my client was very happy with the end-product. It’s just one of those I remember putting in a good amount of time and really enjoying the finished product.

I appreciate all my clients and colleagues who made 2009 a fantastic year. This has been a trying year for the appraisal industry in light of HVCC, but I am grateful nonetheless for all the good things that happened this year. Thank you.

If you are a real estate agent or home owner, what was the best experience you had this year with an appraiser? If you are a real estate appraiser reading this post, what were some of your favorite assignments this year. My Top 10 Favorite Appraisals of 2009


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It’s hard to imagine doing business without a smart phone these days. I feel like I can leave the office and yet stay in constant communication with clients, while having incredibly useful techie business tools at my disposal. It’s like my six year old says, my phone is “Daddy’s small computer”.

I currently use Google’s Android phone, and as a real estate appraiser I find the following apps most useful for me:

googlemaps-smGoogle Maps: Hands down, this is one of the most useful tools for me while I’m on the road. I have leaned on this app many times for GPS location, directions, and finding different routes to navigate.

Google Voice: It’s still amazing to me that I can talk into my phone and Google_Voice_Searchfind search results based on what I say.  This helps me find what I need and drive more “hands free”. I’ve used this tool to find phone numbers, addresses, and other needed information while on the road.

voicerecorder-smVoice Recorder: This is a great little app. I can record a digital note to myself and store it on my phone or email it. I can even send audio notes to a client if need be.

Translator: It’s great to be able to find certain words if I need to use them during an inspection. I speak basic Spanish and I’m always saying things like: “Hola, como estas? Me llamo Ryan” translate 1or “Tienes perros en su yarda?” But sometimes I might need a certain word translated to help communication flow even better. The one big downfall with any translation tool though is you could end up saying something insulting if the tool doesn’t work right (hasn’t happened to me yet).

snapphoto-smCamera: I don’t know that my camera is technically considered an app, but it has saved me countless times when my handheld ran out of batteries. It’s also handy to email photos to clients during inspections if there are certain issues they should be aware of.

app-BFj_csTwitterRide: This is the best Android app for Twitter and it’s handy to tweet from the road and send messages back and forth.

facebook_48Facebook for Android: Honestly, I’m not too impressed with the Android’s Facebook apps, but this one has been mostly okay for me. Once I needed to get a Listing Agent’s phone number while at a property, but the only problem was that I did not know the agent’s name. I put up a quick “help me” status on Facebook and then local Realtor Erin Attardi saw the post and got me what I needed (now I know I can access a PDA link that Metrolist launched in 2009).

imagesCAQKRR31Others: There are some other apps I use from time to time like the flashlight and bubble level, but the ones I use most frequently are listed above. And of course the Star Wars light saber has been a strong defense when dealing with unexpected squatters in REO properties.

What phone apps do you use? What type of business are you in and what apps help you get things done throughout your business day? What phone apps do you use for business?


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Do appraisers need to use comps within a one-mile radius of the property they are appraising? That’s a good question. Many times underwriting guidelines of various lenders mandate that the appraiser MUST use comps located within a mile of the subject property.

I was thinking about this today after a conversation I had with a Realtor in Sacramento about his renovated listing that is pending far higher than anything else in the immediate neighborhood. His suggestion was that the appraiser for his deal should use comps North of the immediate neighborhood, while ignoring the most recent sales on surrounding streets. I know, this sounds heinous, but there is actually some validity to his case because the neighborhood to the North is competitive to the subject neighborhood, and only big-time fixers have sold recently on surrounding streets to the subject.


What does Fannie Mae say? The Fannie Mae Seller’s Guide (PDF) addresses the importance of selecting a minimum of three truly comparable properties in an appraisal report, but there is no mention anywhere of a “one mile radius” standard. The Fannie Mae Seller’s Guide is 1,126 pages, so if you are interested in researching more about comp selection, start at page 477 and scan through 5-10 pages. Fannie Mae basically says that the appraiser needs to use the best available similar properties for comparison, and that comps from competing neighborhoods can be used too (but the appraiser must explain why he/she went out of the immediate neighborhood to utilize “comps” from a different neighborhood – there better be a good reason).

Ultimately lenders have set up their own “one-mile” guideline. Many underwriters mandate that an appraiser is to stay within a one-mile radius of the subject property when in a suburban setting and then a five-mile radius when in a rural area. That’s fine as long as the best available comparables are truly located within those parameters, and if the lender can be understanding why this rule does not work out in every case too. In an ideal world, there will be three recent model match sales within a 1/4 mile of the subject property. But anyone in the housing industry knows how rare that is – especially in today’s market. 

I can see the value of a “one mile” guideline from a lender’s standpoint because they want to make sure that an appraiser is not cherry-picking comps from a far superior neighborhood to justify an inflated value in a neighborhood where properties sell for astronomically less. For example, when looking at the map above, an appraiser probably shouldn’t be selecting “comps” from Curtis Park or Land Park when appraising in Oak Park - unless there is a sincerely good reason to do so of course.

Let me know if you have any questions. 916-595-3735.


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It’s always interesting to appraise properties with big condition issues. There are so many factors to consider and look for, but often properties in “poor” condition (as opposed to “fair” or “good”) include some of the following: severe neglect over the years for whatever reason, additions without permit (usually with shoddy workmanship), unfinished remodeling, water or moisture damage of some sort, debris throughout the site, wood decay, or some other obvious failure such as a caved roof or sagging foundation.


Appraising a “fixer” is similar to any other valuation in that it’s necessary to find comparable properties with the same or similar condition issues. In some areas that is easier to do than others. For example, a 2-bedroom cottage “fixer” is usually not hard to come by as a comp in the 95817 zip code of Sacramento, but a 2-story 3500 square foot ten year old Roseville ”fixer” is a little more challenging. When a house is only a decade old, it’s usually not already in the “fixer” category, right? But imagine if a property was heading toward foreclosure, and the owner (or a vandal) turned on all faucets and stopped up the drains for four days before anyone found out about the problem. Do you think there might be some serious damage throughout the house? Yes indeed. I appraised a property like this within the past year in a different city and it was definitely an interesting valuation situation because there weren’t any other “fixers” with water damage (or similar damage) in the subdivision where the subject property was located. That made things a bit interesting for me to say the least.

Usually “fixer” properties in “poor” condition are attractive to investors instead of first-time home buyers. Investors have two things that many first-time home buyers do not have: 1) Cash to purchase the property outright or cash to cover a significant portion well beyond 20% down. ”Fixers” often do not qualify for conventional financing, so they tend to sell on the lower end of the market where cash reigns supreme; 2) Investors also have cash to fix the property and rent it out or re-sell it on the market in “average” or “good” condition. Appraising Fixer-Type Properties


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Before heading out shortly to inspections in Galt and Stockton, I wanted to post a new video I just put up on our YouTube page. What do you think? This video highlights my company’s local service in Sacramento. I used to make the video. Check out the Animoto website and see what you can produce (they even have free music). Animoto will allow you to produce 30 second videos for free, but otherwise you pay $30 for longer videos (and an entire year of unlimited service). There are so many ways to have fun with a service like this. I can think of how it would work for family, business, friends, jokes, holidays, party invites, etc… Enjoy.   New “Sacramento Appraiser” Video / Check out Animoto


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Someone found this blog through a search yesterday by typing in the following: “Can a Realtor also be an Appraiser?” In case the answer was not found, I wanted to chime in briefly. The answer is “yes”. It is entirely legal for an appraiser to be a real estate broker, Realtor, loan officer or whatever else he/she wants to be. The key though is that the appraiser can only act as an appraiser when appraising. When working as a Realtor, the appraiser takes off his/her appraiser hat and wears the Realtor hat and makes sure to keep the two trades separate. An appraiser who is a Realtor cannot be doing appraisals for his/her own deals either because there would be a big conflict of interest, don’t you think?  Can a Realtor also be an Appraiser? (question from search engine yestesrday)



As an FYI for any readers, this is Fannie Mae’s definition of market value, which is contained in the Fannie Mae appriasal form (1004) that is used for most conventional loans:

imagesMarket value is the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he considers his own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

Examples: If you sell your house and include your red corvette in the garage as part of the sale, it probably wouldn’t fit the definition above because the buyer very likely paid a higher price for the house because of the machine parked in the garage (#5). Or if there are $50,000 of concessions contained in the purchase price, chances are that the buyer paid more for the house to get the benefit of money back, right? (#5) Or if a property is listed on the market for 1 day only, it may have been under-priced and not reflective of the market, right? (#3) (not always the case if a property goes quickly, but often so). Or consider when a family member sells to another family member and how the sales price is often much lower than it would have been if a non-family member purchased the house. This would very likely not be an arms-length transaction where each party is acting in his own best interest (#4). Or imagine a couple is getting divorced and they need to sell their house quickly. The house sells $30,000 below other recent sales in the neighborhood and so it does not fit the definition of market value (# 2 & # 3).  These are the types of issues that appraisers must consider constantly (and these are the reasons why speaking with local Realtors is a crucial part of our job. Having reliable and accurate information leads to better appraisals). 

If anyone has questions, feel free to contact me at 916-595-3735 or  Fannie Mae’s Definition of Market Value


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