What Does An Appraiser Look For?

When either making the appointment or at the property I often hear things like “I’m sorry but I didn’t get a chance to cut my lawn” or “Please excuse the mess as we are packing and have boxes everywhere” or “We are planning on having a deck built later this year and replace the windows after that”.

What ARE we looking for when we are at your property?

You’ve just had an appraiser show up at your door for the appraisal. You now have a stranger in your house that is peering into areas of your home that any other person would need a warrant to see, who will be developing a report that in some instances can have a major impact on your objectives: the purchase of a new home, the ability to take cash out and make needed repairs, refinance to take advantage of rates to get lower monthly payments, etc. Not knowing what they are looking for can leave one feeling pretty anxious.

First, lawn maintenance and tidiness are not on our list. While it is easier to view what we need when the house is neat and tidy, it is not a priority. We are given the liberty to make assumptions that what is not visible is consistent with what is visible. If the carpet and walls appear to be in good condition, then the assumption is made that the carpet under the couch doesn’t have a horrible stain or the wall behind the large mirror does not have extensive damage. Imagine if we had to move everything out of the way so that we see 100% of every surface. A little bit of clutter doesn’t change the way we make assumptions.

To simplify the basic list of what we DO look for when we arrive at your property

size, style, quality and condition.

On the exterior we measure to determine the overall size of the structure(s). This helps us to calculate the gross living area (GLA) and other building areas such as garages, barns, sheds, etc.

Then we are looking at the style, materials and workmanship- ranch vs cape cod, attached garage vs detached garage, brick vs vinyl, metal vs composite shingle, plain design vs ornate and detailed, basic materials vs high end materials, new vs old. Each of these details are documented in order to give us a clear picture of the size, quality and condition.

On the interior, as we walk through the house, we are also determining the same things in addition to the utility or functionality of the property. Overall, how many rooms/bedrooms/bathrooms are there and what is the layout? Is it a 50 year old house with mostly original finishes, has everything been remodeled recently or something in between? Have the short lived items been replaced- hot water tank, furnace, carpeting, etc.? Is it stock grade cabinetry or is it a custom kitchen with all the bells and whistles? Are there 2 bathrooms or 4 bathrooms? All of these details matter.

In all honesty, I don’t even see the dozens of boxes that are packed and waiting for the moving truck to load and bring them to another location. I do notice the newly refinished hardwood flooring, the new furnace, the older plastic tile bathroom (yes we have plastic tile bathrooms in our area- once popular in the 50’s and 60’s), the lack of GFCI outlets near water sources, the settlement cracks in the basement, etc.

For those improvements you are planning to make, unless we are doing an appraisal that is “subject to” these things being completed in the future, what you are planning to do will have no impact on the value. Conversely, the renovations you have made over the years also have little impact in light of what it used to be. We base our analysis on what exists now. It is good for us to know and have a list of those improvements so that our information is accurate. However, if you had carpet when you purchased the property 15 years ago and have since replaced it with hardwood flooring and ceramic tile, what matters is that you currently have the hardwood flooring and ceramic tile.

The next time you are having an appraisal completed on your home, having the regular maintenance of your yard completed and the housekeeping tidy is helpful so that we can see as much of the property in its best light as possible. However, this has little impact on the size, quality and condition of the components that exist the day we are at your property collecting all this data. The existing salient features, their quality and condition are what we are looking for.

Times Are A-Changin'

Over the past couple months, there has been a shift in the market here in the Greensburg area of Westmoreland County. These changes are being affected by multiple factors such as the seasonal time of year that typically impacts real estate, the rise in interest rates and the need for the market to correct itself from the heightened activity over the past year. This shift was so pronounced in a recent appraisal I completed that I had to share it with you. Below is a graph that was taken from a work file for a property I have recently appraised. This is real time data. When you take a look at this graph, it clearly shows that the supply in the market has made a rapid rise within the past month and is starting to equal the Summer of 2020 and pre-Covid levels.

You might ask, “What does this mean?”. Well, I don’t have a crystal ball and am not in the business of being an economic forecaster- so the immediate answer is “I don’t know yet”. Only time will tell. However, just like the leaves are changing color indicating changes are coming, real estate data is starting to tell us that changes are possibly coming in the near future.

Keep updated with my blog. As soon as I have more information to pass along regarding marketing trends, I will pass it along to you.

FHA and Storage Tanks

As most know, FHA follows the guidelines set forth in the HUD Handbook 4000.1 which includes the MPR’s (Minimum Property Requirements) that we have to follow when appraising a property that is being insured by FHA financing. Over time, these requirements are revised and if not fully aware, one might not realize that these changes can affect a property’s ability to qualify for this type of financing.

One of these changes that took place is in regards to storage tanks that contain hazardous or flammable materials- such as propane, automobile fuel, oil, natural gas, etc.

Prior to this change, it used to be that if a property line were within less than 300’ of a property that contained underground storage tanks with a capacity of at least 1,000 gallons of such material, the property did not qualify for FHA insured financing. In some of our towns with corner convenience stores that included gas pumps (such as Greensburg), this meant that any property within 300’ of this did not qualify.

However, HUD has chosen to change the language and now only states that those properties within 300’ of a property with above ground storage tanks do not qualify and has deleted the words “under ground”.

(7) Stationary Storage Tanks

If the subject property line is located within 300 feet of an aboveground, stationary storage tank with a capacity of 1,000 gallons or more of flammable or explosive material, then the Property is ineligible for FHA insurance, and the Appraiser must notify the Mortgagee of the deficiency of MPR or MPS.

So this is good news. It appears that those properties within 300’ of a gas station that contain underground storage tanks for their fuel now qualify, whereas once they did not.

When Should I Get An Appraisal

Most people know that appraisals need to be completed for lending purposes. But did you know there are a number of other reasons you should be contracting an appraiser to perform a professional valuation on your property?

 1. When you are the seller of a FSBO (For Sale By Owner). My experience in completing appraisals for properties that have been sold without the professional expertise of a real estate professional is that the selling price is often lower than the value. Many people think that they are saving the expense of paying a commission to a broker and therefore have some wiggle room in deciding on a sale price. Based on my research of keeping the data on these types of transactions, at least 75% - 80% of the time, the seller would have had a higher net income even if they were to have paid the commission. If you plan on selling your home, you have two options- either contract a real estate agent to properly help you price and market the home or get an appraisal so that you can maximize your income from the sale.

 2. When you are a cash buyer you definitely want to get an appraisal. In cases where a buyer is using financing, there is a built in fail safe because the lender is going to require an appraisal. If the appraisal determines that the value of the property is less than the agreed upon purchase price, this will impact the loan and often allow the parties to renegotiate in order to make the transaction work. If you are paying cash, you should choose an appraisal contingency that allows you the option to have an appraisal completed. This way you can be assured that what you are choosing to pay is based on the information about what the property is worth. In todays crazy market, many people are choosing to pay more just to get into a house, but with an appraisal it would be a willing choice based on being informed. If you would prefer to not pay more than the property is worth, then an appraisal contingency will allow you to either renegotiate or back out without penalty.

 3. When you are the executor or executrix for an estate. Estate appraisals are necessary to be able to pay the appropriate level of estate taxes. Many times the probate attorney will need an appraisal in order to properly calculate the estate taxes. This information can also be helpful in determining if a family member is willing and able to purchase the property or if it is best to sell it on the open market.

4. Divorce litigation- Divorces are never easy and when there is shared real estate involved, typically an appraisal will be ordered by both parties as part of the overall process. These appraisals should not be considerably different as it should not matter which side the valuation is being performed for. In some cases, if there is a significant difference in the values, the court will order a third or make a ruling based on the testimony of the appraisers for the reports already completed. This value becomes important if you have ever heard the term “buy out”. The party that desires to stay in the home has to buy out the party that is no longer going to be in the home.

 5. Consulting services are what you need if you are looking to remodel, subdivide or construct an new addition. If you are looking to make major renovations, subdivide a large parcel of property into smaller multiple parcels or construct an addition to your home, it is strongly advised to consult a real estate appraiser to help you in determining how to maximize the value versus the cost. Too often I’ve encountered many well intended owners who spend tens of thousands of dollars to make major renovations to their home or property without realizing that the return on their investment is minimal and no where near the investment they made. In the end, they are saddled with a large amount of debt and little return to show for it. A few firsthand examples I have seen is the $75,000 spent for a custom in ground pool, the $3,000,000+ custom home in an area that has median sale prices around $200,000 or the $100,000 renovation to a 150 year old barn with minimal contributory value. Consulting services can help you determine the best renovations to make resulting in the highest market value or it can help give you an insight into the highest potential for a subdivision or addition.

 There are other possible reasons for needing an appraisals, such as tax appeals, bankruptcy or eminent domain, but these are some of the more common ones. In the near future, I’d like to expound on these in even more detail. In the meantime, if you need an appraisal for any purpose, please trust the Gold Level Real Estate Appraisal Office from the Best of Westmoreland County 2022 contest. We would be more than happy to help you with all of your real estate valuation needs.

Another Electric Recall

Did you see the latest electrical recall headline? Schneider Electric™ Recalls 1.4 Million Electrical Panels Due to Thermal Burn and Fire Hazards

That is a lot of electrical panels. The long standing recall for unsafe panels dealt with Federal Pacific Stab-lok Breakers. Now the new recall involves “Square D” breakers and panels manufactured by Schneider Electric.

The hazard is described as: The load center can overheat, posing thermal burn and fire hazards. Specifically:

The issue detected is a loose neutral screw connection within the QO Plug-On Neutral Load Center.

The recall affects Square D QO Plug-on neutral load centers, commonly called breaker boxes or electrical panels, that might have been installed in homes, recreational vehicles, or commercial structures such as restaurants, manufacturing facilities, warehouses, commercial lighting, and others.

The affected products were manufactured between February 2020 and January 2022, with date codes between 200561 and 220233. Circuit breaker boxes and covers manufactured between December 2019 and March 2022 are also included in the recall.

The recall notice provides advice on how to read the date codes:

For installed outdoor load centers, the manufacturing date codes are printed on the inside of the cover or door of the unit or on the box itself when the cover or door is open.

For installed indoor load centers, a qualified electrician can locate the interior date codes that are not visible to the home owner.

If you think you have one of these panels installed in your home, call a certified electrician to not only determine if you have one of these panels, but can replace any needed faulty components with ones that do not pose a hazard to your home.

For more information click on the link below:

https://www.cpsc.gov/Recalls/2022/Schneider-ElectricTM-Recalls-1-4-Million-Electrical-Panels-Due-to-Thermal-Burn-and-Fire-Hazards

Modular vs Manufactured-There IS a Distinction

Modular and manufactured homes are both prefabricated structures, however, there is a noted difference between the two. Confusion abounds because many real estate professionals use the words Modular, Manufactured, Doublewide, Mobile Home and Trailer seemingly interchangeably. Let’s see if we can clear up the confusion.

First we must understand that the term “mobile home” is obsolete and refers to transportable homes constructed prior to June 30, 1976. This is an important date that becomes a critical date to keep in mind. After this date, the building codes changed drastically and new building standards were adopted.

The major distinction between a modular and manufactured home- the standard to which they are constructed. Modular homes are built to building code and manufactured homes are built to HUD code. These are two distinctly difference codes. When a manufactured home is completed, it is inspected by a HUD certified inspector in the factory. You can verify that a manufactured home has been inspected by the metal tag which is placed on the outside indicating it meets the HUD code (one tag per section). They HUD code is a federal code and explains why they can be placed anywhere in the country once they are built. Modular homes do not have these metal tags on the outside as they are built to meet the local building code in which they will be located. The final inspection for these structures are conducted by approved inspectors for the area they are located and not in factory.

Another specific fact that makes modular structures different from manufactured homes is that a modular home is not constructed on a chassis. The metal chassis used to transport a modular structure to the site does not remain in place and acts solely as support for transport purposes only. Manufactured homes are built 100% off site and constructed on the chassis. The chassis is an important intregal part of the structure that remains in place. The chassis allows for the manufactured home to be placed on foundation systems which are varied and can include full foundations, in-ground piers or pads. Modular homes do not have the ability to be placed on pier or pads.

A couple distinctions that affect your appraisal and lending ability also are related to these differences. Modular homes are treated similarly to stick built structures and have the least restrictions. When appraising a modular home, it is essentially treated similarly to an on site stick built structure and typically there are no lending restrictions.

Conversely, manufactured homes are different. When appraising manufactured homes, it is typical to only use other manufactured sales as comparables. Also, there are many lenders that will not loan on properties that are manufactured homes. This reduces the size of the typical buyer pool and can negatively impact the value for this reason.

Lets circle back to the June 30, 1976 date. When appraising a manufactured home, it is important to locate the Certification Data Plate which is typically located on the interior of the home under a kitchen or bathroom sink. This information is necessary to prove the date of manufacture because lenders that do allow for loans on these types of structures want to verify it was manufactured after this date. Those homes manufactured prior to this date do not qualify for any of your typical financing- conventional, FHA, USDA or VA financing. This can severely inhibit the marketability for these types of properties. There might be some small portfolio type lenders that will allow financing on these older units, but they are few and far between.

When making the decision to purchase a modular or manufactured home, know the differences as these can significantly affect your ability to market the property and obtain financing. If you are unsure as to the type of prefabricated structure you are dealing with, give our office a call. We specialize in appraising all forms of prefabricated structures and have the experience to help you.

Just The Facts Ma'am

Recently I have completed a couple appraisals involving properties with installed financed solar panels. In each case, I asked the home owner a lot of questions regarding their “investment”. The reason I put that word in quotes is because the idea of solar panels in our area being an investment is at best loosely termed. I’ll present “just the facts” and let you be the judge.

I’ll start off with a major disclaimer- I am not a solar energy expert by any means. However, I have enough experience and have researched enough information to help others in making a financial decision when it pertains to the value of their property. The purpose of this post is not to get into a discussion about the pros and cons of clean energy or solar energy in particular. What I would like to discuss is whether or not solar power will add value to your home in our geographic location. Many articles, including the one referenced just below mention that solar panels can increase the value of many homes. The big question is will they add value to your home? As in all cases when it comes to an appraisal question the answer is always “it depends”.

If you want to know more about solar panels themselves, click below for more information:

Click on the image to find more general information on solar panels.

I’ll only use one example as they all follow a similar trend. The house in question was valued around $170,000 with none of the value attributed to the solar panels as there isn’t sufficient sales data in our area to extract a contributory value for the amenity of solar panels. The owner purchased 20 panels for $40,000 using financing which was to be amortized over 20 years with a 3.5% interest rate. The purchaser decided against purchasing the battery bank which would have added another $20,000. That is important to note as a battery bank allows you to store the energy generated by the solar panels. Solar panels do not store electricity so when they are not generating electric (like at night) you will be using the electricity provided by your electric company and not from your panels.

The owner stated that the company marketing these panels was very “pushy” and made it so that they only had a couple days to decide. They were in the area and that was the only time they’d be given the opportunity to buy into these panels. They also stated that the amount of panels he was using would provide a sufficient amount of electricity so that they wouldn’t have an electric bill once the system was installed.

However, this did not turn out to be true. Currently their average bill is about $50 - $70 a month which is about $100 savings per month in the electric cost from what they were paying prior to the installation. There is also an additional savings on the gas bill as they converted their main heat source from a gas furnace (now used as back up for when the electric goes out) to an electric heat pump. For sake of example, lets conservatively estimate they are saving $200 average per month ($100 savings in electric and now not having a gas bill). You be the judge as to whether this was a good investment. To quote the owner, “If I had to do it all over again, I would not have done it.”

To break this down: $40,000 amortized over 20 years at a rate of 3.5% calculates to a monthly payment of $231.98 and a total cost of $55,676.50. You would had to have saved at the very least that much over the 40 year period of time in order to break even. We haven’t even discussed that solar panels have an economic life to them and over time have a reduced rate of efficiency. At some point, they need to be replaced and have an average life expectancy of 25 - 30 years. The older they are, the lower their capacity to generate solar power.

Now…. just the facts.

HOW MANY SUNNY DAYS DO WE TYPICALLY GET IN THE GREENSBURG, PA AREA?

According to online sources, Greensburg, PA gets about 163 sunny days per year. This includes sunny and partly sunny days. While solar panels still can generate power on cloudy days, they just might generate less power, depending upon the quality and efficiency of your panels

IS THE LOAN FOR PURCHASING SOLAR PANELS TRANSFERRABLE IF I SELL MY HOUSE?

Most loans utilized for the purchase of solar panels are not assumable. If you decide to sell your property prior to the payoff of these loans, the proceeds for the sale of the property would need to cover the amount of any existing mortgage and the additional loan for the solar panels in order for that the panels to be paid off. If not, then you would still be responsible for paying the entirety of the loan whether you own the home or not.

ARE THERE TAX CREDITS FOR SOLAR PANELS?

There are credits, however, there are a number of factors that determine the amount of credits and how they are applied. For information check out this site:

https://www.energy.gov/eere/solar/homeowners-guide-federal-tax-credit-solar-photovoltaics

WHAT IS THE LIFE EXPECTANCY FOR SOLAR PANELS?

According to an article found on GreenBiz,

“Solar power is having its hockey stick moment. Since the early 2000s, the amount of solar panels being installed worldwide has been growing exponentially, and it’s expected to continue to do so for decades. By the end of 2015, an estimated 222 gigawatts worth of solar energy had been installed worldwide. According to a recent report from the International Renewable Energy Agency, that number could reach 4,500 GW by 2050.

But the solar panels generating that power don’t last forever. The industry standard life span is about 25 to 30 years, and that means that some panels installed at the early end of the current boom aren’t long from being retired. And each passing year, more will be pulled from service — glass and metal photovoltaic modules that soon will start adding up to millions, and then tens of millions of metric tons of material.”

WHAT DOES A BATTERY BANK DO FOR SOLAR POWER?

The battery bank allows you to store the energy produced by the panels during non-peak hours. Here is a helpful comprehensive link from SolarReviews.com regarding solar battery banks:

https://www.solarreviews.com/blog/is-solar-battery-storage-worth-it-given-current-solar-battery-cost

WHAT WILL IT COST FOR ME TO INSTALL A SOLAR POWER SYSTEM ON MY PROPERTY?

According to Bob Vila’s website, “the typical cost of solar panels ranges between $17,000 and $34,174, with the national average at $25,633.” This represents the cost of the panels and does not represent the added cost of the battery bank system.

For a more comprehensive article on the cost of a solar energy system check out this article from Nerd Wallet:

https://www.nerdwallet.com/article/finance/solar-panel-cost#:~:text=With%20installation%2C%20an%20average%20residential,to%20pay%20for%20solar%20panels.

Now that you know the facts, will a solar energy system add value to your home?

One Upon A Time.... A Housing Fairy Tale

Once upon a time, there was a rich nation which valued many things. There were many owners and “wannabe” owners. The owners wanted to be richer and the wannabes wanted to be like the owners. They all liked value. Some people even became “valuers of things.” They claimed to know value.

Value was price. It was obvious. Nothing to talk about here. Move along.

The owners needed money they didn’t have. So, they got help from loaners.

The loaners put up most of the money and became interested. The loaner-owners also wanted to be rich. They could get rich by “selling money!”. (Actually, they were only renting the money, but no one wanted to hear that.) And best of all, they were not renting their own money. They were renting other people’s money (OPM), and the other people didn’t really own the money either. It was just sort of out there, all guaranteed, completely safe.

What is important is that everyone liked value, but everyone needed to have someone say the value is fair. They were able to get others to declare the value as fair, but some valued fair as high as possible. “Uppraisers” were in demand.

A few of the dealer wheelers got together. The loaners became lender benders. They found liar buyers. And they found uppraisers.

All the owners, the wannabe owners, and the loaner-helpers liked uppraisers a lot because they helped richness for all. Everything worked well so long as “value” equaled price!

Until it didn’t.

~Reproduced with permission from George Dell, SRA, MAI, ASA, CRE - an excerpt from an article in the Appraisal Buzz, Thirteenth Edition, Fall 2022, Price vs Value, as found on page 27

Why You Should Not Rely on Your Zestimate

If only I received a dollar for every person I heard say “Zillow says my house is worth $XXX” I could possibly retire…. Well, that may be a slight exaggeration, but it doesn’t negate the fact that people trust what they deem to be reliable information. My advice to you is that you should not trust the stated Zestimate as a reliable source to determine what your house is worth. A Zillow estimate IS NOT an appraisal. I am not anti-Zillow since I do believe there is a place for them in todays big data world, however, it cannot be relied upon as a trusted source to determine the value of your home. Let me explain why.

First, the source of the information for your house might be unreliable. They use available public record, real estate industry data and user-submitted information to determine the features of your home. In my 22 years of real estate experience, I have found that these records are often inaccurate when determining the style, size, bedrooms, bathrooms, etc. In addition, these records never indicate to what degree a home has been maintained. Some people are very proactive at keeping their home well maintained and others…. well, not so much. I’ve seen it all in 22 years. Over the life of the home, there are items that affect the quality and condition of a home related to remodeling/updates and overall ongoing maintenance. Public records often don’t give a true insight into these finer details.

Second, the algorithm they use relies heavily on the zip code. Zip code does not typically relate to neighborhood or market area. The algorithm has improved due to location but using zip code can be misleading. In our area, we have a good example with the zip code 15601 which corresponds to the Greensburg City post office. All the zip code relates to is which USPS office handles and distributes the mail to that address. Within the 15601 zip code you have multiple municipalities such as Greensburg City, Hempfield Township, Salem Township, South Greensburg and Unity Township. That is 5 different areas that are serviced by 3 different school districts. As one would suspect, all of these areas are not similar and would include a higher density area with older structures in the City of Greensburg, residential rural areas with multiple acre parcels like some of Salem Township and newer suburban residential plans often found in Hempfield and Unity Townships. The algorithm used to determine the zestimate includes sales prices from all of these areas since they are all located in 15601 making the result less reliable even if it was only a portion of the factor in the algorithm.

Let me give you a real life example. I live in a homogeneous condominium community with townhome styled units built in the 1970’s. One of my neighbors just listed their townhome for $185,000. The zestimate for this property is around $248,000. It would not make sense for it to be listed for almost $65,000 less if it really was worth that much. The most likely reason for the high zestimate is the effect of living in a municipality with predominantly higher sale prices than the price point of our properties. The highest sale in the past 3 years has never exceeded $200,000 and only recently, have the sale prices been inching above $175,000 due to current increasing predominant sale prices overall.

Click here to read an article on the accuracy of online estimates

Instead of using a free but inaccurate source for information, trust an experienced professional real estate appraiser to indicate the correct estimate of market value for your home. Just think. If the algorithm was even remotely accurate, why did Spencer Rascoff, the owner of Zillow, sell his property in 2016 for 40 % less than the zestimate?

But I Paid For The Appraisal!

Many times when speaking with a borrower, we are asked the question “Will I receive a copy of your report?” The answer to that is mostly yes but not in the way that most are expecting. Lenders have specific guidelines as to when and how a borrower receives a copy of the appraisal. In short, for first lien mortgages, lenders are required to provide a free copy of the appraisal report promptly after the report is completed and no later than 3 days prior to the loan closing. However, since the borrower is not our client, that report will not be sent by us.

USPAP is very clear about our responsibilities as an appraiser. For those who are not aware, USPAP stands for Uniform Standards for Professional Appraisal Practice. Prior to our applying for a trainee license, we are required to take a 15 hour course on this document. Then every 2 years we need to take a 7 hour update class. This document is the basis for how appraisers are to conduct themselves professionally and by state law, we must adhere to the principles and procedures contained in it.

 USPAP defines the client as “the party or parties who engage, by employment or contract, an appraiser in a specific assignment”. When the assignment is for lending purposes, it is either the lender who directly contracts the appraiser to perform the assignment and, more often than not as of this writing, an AMC (Appraisal Management Company) contracts the appraiser. An AMC is a vendor for the lender in order to more easily comply with Appraiser Independence Requirements that were initiated around the time of the 2007 mortgage crisis. USPAP is very clear as to the obligations we as appraisers are to adhere to when it pertains to our client and conversely prohibits us from those same obligations to anyone who is not our client. Nowhere in the definition of client does it refer to who paid for the appraisal.

 I could get on my soapbox about how the lender should be covering the cost of the appraisal for the reason that the lender is using the report for the sole purpose of making a business decision. The report is for their specific intended use and for them specifically as an intended user. The borrower named on the report is often clearly indicated within the report to NOT be an intended user and therefore, I feel the lender should be paying for the report. But I digress and with that said, since the borrower is not the client, we cannot provide the report nor discuss the report with them even if they paid for it. Yes it is their property, or will potentially be their property. Yes they might have paid for it. Yes they might even disagree with the conclusions contained in the report. But in short, they are not the client and therefore, any and all information they would like to receive about that appraisal needs to come from the lender.

 In closing, if you have received a copy of your appraisal and would like to speak to the appraiser who completed it, you need to go through the lender. We typically instruct any borrower who calls our office with questions or complaints to contact their lender who in turn will then contact us to discuss any issues you might have. We agree- you might have already paid for it. But we also must adhere to our guidelines and remember who the client is.

The Best Real Estate Appraisal Office in Westmoreland County 2022

Town & Country Residential Appraisals would like to thank you from the bottom of our hearts for voting us the #1 Real Estate Appraisal Office in Westmoreland County for the year 2022!!!

For over 13 years we have prided ourselves with providing the best in service and the highest quality professional independent reports. Now we have been recognized and couldn’t be more grateful.

The Best of Westmoreland is a contest that was organized by Renda Broadcasting Corporation through WHJB 107.1 out of Greensburg. The station opened up nominations on March 17, 2022 and these nominations ended about 3 weeks later. The voting was then opened up on April 13th and was kept open for a little over 2 weeks. I had never heard of this station nor was I aware of the contest.

I was contacted in May by Lora Kay, the station’s morning on-air personality to let me know that I had won Gold for the category of Real Estate Appraisal office. At first, I thought it was a scam and was suspect that this was even a true contest. After I looked into it and confirmed this was a real contest, that Lora was a real person and in fact, I had won, I was speechless. It has been hard to keep this a secret. We had to sign a Non-disclosure agreement to keep it under wraps until todays announcement at noon.

Please keep us in mind when you are needing to have an appraisal completed. While we provide many reports for the common purchase and for refinance loans which are not directly ordered by the borrower, we can help you with your other valuation needs such as assessment appeal, divorce, estate planning, estate taxes determination, private purchase, pre-listing and bankruptcy. Whatever your need for an independent certified appraisal report, when you choose our office to assist you, you can be confident that you are choosing the #1 Real Estate Appraisal Office in all of Westmoreland County.

Our Team Has Expanded

We are excited to have expanded our team after about 2 years of limited growth. Christopher Ronallo is going to be assisting our staff appraisers and in the process, will be working to obtain the experience necessary to transition from his current position as a Licensed Appraiser Trainee to a Staff Appraiser. We are hopeful that this process will take about 16 - 18 months.

Chris came to us having had some experience as an appraiser trainee from a few years ago. In 2018, circumstances beyond his control led to him to needing to find another supervisor. This proved to be difficult and ultimately, he was not successful. He found employment in a different industry but the experience within the appraisal profession left him with the desire to return to appraising.

He started with Town & Country Residential Appraisals in June 2022 and has been working with us behind the scenes getting up to speed with our digital processes, working with the support staff to learn our systems and has now been assisting out on the road with our Senior Staff Appraiser for about 4 weeks. As you can see, in the office he is getting his own assistance from Ninja, the resident office cat.

Ninja assisting our newest team member, Christopher Ronallo

Chris holds a Bachelor Degree in Accounting from Washington and Jefferson college. Prior to appraising, he had over 20 years in accounting with experience in all facets of the business world including an accounting manager for a large company, CFO for a non-profit organization and Controller for a senior living community.

When not working or studying for his appraiser tests, Chris says he leads a boring life and spends most of his free time with family, reading and listening to a variety of podcasts.

We are very pleased to have another team member that will be able to help us continue to provide you with the best appraisal services in a competent and professional manner. If you see Chris, welcome him into the profession and help us wish him all the best in success as he continues on the path to being a Certified Residential Appraiser.

Let The Nurse Take Your Temperature

How many of you go to the doctors office and refuse to allow the nurse to take your temperature or blood pressure? In reality, you are ultimately there to see the doctor. To allow someone who is not the doctor to take your temperature, blood pressure, weight, list of symptoms and medications is not what you paid for, right? You pay for the doctor and you are going to insist that the doctor do everything that needs to be done including everything that the nurse typically does. Let’s face it. The nurse doesn’t have their level of expertise or education, so why would you have someone who is not the doctor do anything for you while in their office? When you think about this scenario, it does sound a little absurd. Most of us don’t even think about it let alone question it.

 Doctors are not the only example. Most professions have multiple levels of expertise that ultimately assist the highest level within the organization. Lawyers have paralegal personnel. Plumbers have apprentices. Professors have graduate students. Coaches have assistant coaches. Presidents have Vice Presidents. Real estate brokers have real estate sales persons.

Well, in our profession, APPRAISERS HAVE TRAINEES.

Real estate appraiser requirements have significantly advanced over the past few decades with increasing educational requirements and a few revisions to the experience process. However, one thing remains the same- you have to be a “trainee” under the supervision of a qualified certified appraiser for a period of time before you are able to fulfill the requirements to become independently certified. I put the word in quotes because, honestly, I don’t like the word. The word “trainee” seems very unprofessional as a term and would be best served to be replaced with the word Intern, Assistant or Apprentice. In essence, when you compare the requirements and process to other professions, that is exactly what they are. They are no less of a professional and are fulfilling the necessary requirements to be fully recognized as a qualified professional.

To find out more about the requirements for the state of Pennsylvania, click here:

PA Real Estate Appraiser Requirements

 In the past, I have trained multiple Appraiser Trainees who are successful independent Certified Appraisers today. Over the years, I have encountered a lack of confidence by clients and/or other parties to a transaction when a trainee is involved, especially when it comes to the portion of the process that is the observations of the actual real estate. It is possible that this is most attributed to the fact that this is the part of the process that is most in view of the general public. At the end of every on site appointment, I tell the person I meet at the property that this is the easiest and least time consuming part of the appraisal process. The portion of the process that no one sees, is the market data analyzing, the report writing and the overall analysis of the property in relation to value. This is the part that takes the longest amount of time, the most experience and the most amount of training.

 Most states have very defined laws as to whether or not a trainee can be at a property without their supervisor. In Pennsylvania, after a trainee has accumulated a minimum of 300 field hours and the supervisor deems them to be competent to complete the inspection independently, they do not need the supervisor on site. Even when the trainee views a property without the supervisor, this does not mean that the appraisal was completed in its entirety by the trainee. At the very least, the supervisor needs to review and attest to the final report even if they were mostly not involved. Typically, the supervisory appraiser has been involved in the comparable selection, the analysis and the final estimate of market value.

 So if you find yourself having an appraisal performed by my office and, as the supervisory appraiser, deems it legal and appropriate to only send the trainee to collect the real property data, just like the nurse in the doctors office, you can be assured the trainee is competent to collect the property data alone and the final report has been thoroughly reviewed, approved and signed by myself.

Stay tuned for next weeks post where I introduce our newest member of the team, Christopher Ronallo, PA Licensed Appraiser Trainee.

Observe or Inspect?

Inspection: careful examination or scrutiny

Observation: the action or process of observing something carefully in order to gain information

While the definitions are close, inspection seems to indicate a more detailed way of looking at something just by the words “examination” and ”scrutiny”.

There seems to be some confusion as to the role of the appraiser when performing an “inspection”. The process of going to the house to view a property is often termed inspection by many, including the appraiser. This can be confusing to the general public, and no matter what it is called, is not equivalent to that of an inspection performed by a home inspector. For this reason, I have recently changed the way I describe the process of collecting pertinent information about the property I’m appraising as an observation. When HUD updated its handbook for FHA insured loans, under the responsibilities of the appraiser they even stopped using the word inspection and replaced it with observe or observation.

An inspection performed by a licensed home inspector requires a higher level of scrutiny that is not within the scope of work for appraisal purposes. A quality home inspection can reveal critical information about the condition of a home and its systems. This makes the buyer aware of what costs, repairs and maintenance the home may require immediately, and over time. A home inspection in no way ever addresses how these conditions relate to value. In fact, the licensing laws and regulations for home inspectors do not permit them to develop opinions of property value.

As appraisers, when on site at the property, we observe the pertinent salient features of a property in order to determine size, functionality, quality and condition for the sole purpose of analyzing how these items affect the marketability and contributory value. It is clearly stated in most appraisal reports that while we make certain determinations as to the quality and condition of the house and its individual systems or components, we are not inspectors and do not warrant or guarantee these items.

Regardless of what it is called, the role of the home inspector and the appraiser is very different. A home inspector will evaluate the home to determine the condition for the purpose of informing the client about critical information pertaining to the home and its systems. An appraiser will observe the relevant characteristics of a property in order to relate it to value.

Some Lighthearted Humor- At My Own Expense

In real estate, we often have some funny circumstances happen to us. After speaking with one of my administrative assistants about a particular incident that happened today, she suggested that I should someday write these things down. Over the years, my staff have been quite entertained by a few of these stories. This gave me the bright idea to have a subset of articles written about my own calamities and the funny circumstances we find ourselves in as appraisers.

This particular morning, I was running a little ahead of schedule which is not typical for me as most who know me will verify that I am not a morning person. It takes a bit of caffeine to get my brain in gear. Upon pulling in the driveway of my first appointment, knowing I was early, I turned off the car and unrolled the window. The breeze and temperature was especially enjoyable this morning and with the price of gas, I figured I would take advantage of the sunny cool morning, not waste my gas and maybe go through some emails. After a few minutes, since no one had yet showed up to open the house, I decided to get out and grab my cleaning supplies so that I could wipe down the inch of dust that had collected on my dash board. It wasn’t much long after accomplishing this that I was able to get into the house.

After completing what I was there to do, I returned to my car only to find that my door was locked. I was a little puzzled and confused as to why it was locked. I didn’t remember locking it. Since it was a quick in and out, I had left the keys in the car which should have prevented it from locking. But then I realized the window was still down. This should be easy- I’ll just unlock it from the interior of the door. I reached in, pushed the unlock button.…. nothing. At this point, I tried the other 3 doors to find they were also locked. I could see the keys in the cup holder and figured I could just reach in and grab them hoping I would be able to unlock the doors with the key fob. However, I’ve been accused of having Tyrannosaurus Rex arms. Add that to my 5’ 1” height and it is apparent this will not work. Unless I was to wedge myself through the window up to about my waist, I was never going to reach them. That was not going to be ideal so I figured there had to be another way.

Now what is one to do when they need to get in the car and the only access is the open window? The thought went through my head to try a “Dukes of Hazard Style” climb through the door. As I stood there and contemplated the feat (I even tried to lift my leg to get it up over the bottom of the window frame), it was clear this would never work. First, the bottom of the window door frame is well above my hip and just the thought of trying to swing my leg up over the edge to straddle the door and climb in sent nightmarish images of me either falling flat on my back or somehow getting wedged stuck halfway hanging out the car and halfway inside the car.

It then occurred to me that the hatch might still work since I had previously stepped out of the car to obtain and return my cleaning supplies. I hastily said a quick prayer that it would open. Going through the window would have been my only other resort and it wasn’t going to be pretty. As it was, the hatch opened and crawling through the car over the seats wasn’t very pretty either, but I am still in one piece and made it to my next appointment on time.

Lesson learned- never leave your keys in the car.

What is Appraiser Blacklisting?

The role of the appraiser is to be an unbiased objective party within the many facets of the lending process whether it be for a purchase, home equity loan or refinance. In the case of a home purchase where the borrower is using a bank loan to assist with the purchase, there are multiple parties to the transaction who have an interest in and are financially dependent upon the consumation of the sale. The buyer and seller might have opposing Interests but they equally desire for the sale to close. The buyer obviously wants to have ownership of the home and the seller would like to, for whatever the reason, no longer own the home and either pay off their existing loan and/or walk away with some cash. The agents who are representing these two parties also would like for the sale to close because they don’t get paid until it does. Their commission is not only dependent on the sale being completed, but also on the amount of the sale. Which leads to the added layer for agents- the higher the sale, the higher their commission. Last but not least is the loan originator and the lender. Their main interest is to make loans and the originator gets a commission which does not get paid until the loan is closed. As you can imagine, each of these individuals have very specific special interests that are contingent upon the completion of the transaction. All but the buyer, also have the incentive to have the sale price as high as possible because they will ultimately end up with more money in their pocket.

That leaves one party in which there is no incentive because they get paid a flat fee regardless of price or a closing… the appraiser. Their fee CANNOT be contingent upon meeting or exceeding a specific value. The appraiser agrees to uphold the code of ethics as established by the Uniform Standards for Professional Appraisal Practice, also referred to as USPAP (You’s-pap). The Ethics Rule within USPAP states that appraisers are to be impartial, objective and independent to the transaction. In other words, the opinion of market value cannot and should not be influenced in ANY way by the parties to the transaction or the sale price. Illegal pressure and influence on the appraiser should be prevented and is the responsibility of all real estate professionals to uphold, with the appraiser being the one that should safeguard it at all costs. This illegal pressure and influence can also be levied in the form of blocking certain appraisers from completing assignments due to a prior “low value”.

Recently, there seems to be a trend amongst the parties that have a special interest in a transaction to thwart the Appraiser Independence Requirements (AIR) as set forth by the Home Valuation Code of Conduct (HVCC) and overseen by the Consumer Finance Protection Bureau (CFPB). This trend is being seen in the form of complaints that there is a “Conflict of Interest” between who is the assigned appraiser and one of the parties to the transaction. The “conflict of interest” is code for “this appraiser completed a prior report that was lower than I would have liked so I no longer want that appraiser completing future assignments for me”. Somehow they feel that they are minimizing the risk of another appraisal “coming in low” and hoping they get an appraiser that will “hit the number” for them.

The complaint comes most often from the agent, but recently I had one where once the agent complaint of a conflict of interest was not validated by the lender due to no actual conflict of interest, the seller then somehow stated that they also had a conflict of interest with the appraiser. The seller wasn’t even represented by the agent who stated the original conflict of interest. The seller conflict of interest was due to a supposed donation made by the appraiser to a non-profit organization they were a director for. After discussions with the lender stating this was not the case and it was clear that no such donations were ever made to the organization, the seller then refused to allow the appraiser entrance into their home. Let’s be clear, the complaint of conflict of interest was not substantiated or valid from either the agent or the seller, but once the seller refuses to allow entrance to their home, there isn’t much the lender can do other than reassign. This example was a clear egregious illegal effort by the agent to influence who completed the appraisal.

 While there are definite situations that could be seen as a conflict of interest, many of these instances are nothing more than one of the parties trying to influence the appraiser assigned to value the property. Some of these instances in which I have declined to proceed with an assignment due to a conflict of interest is when I have a personal familial relationship with either the buyer or seller, when one of the agents representing the buyer or seller is an employee of mine or when I have completed an assignment on the property for a different purpose that would be in conflict with the current assignment request.

The perceived “conflict of interest” being complained about recently is nothing more than a disagreement with the value of prior assignments in which it has affected either the outcome of the sale price or possibly even affected the closing of the sale. This is not a valid or substantiated conflict of interest. In the world of real estate, there is bound to be a portion of the appraisals that do not meet or exceed the agreement between the buyer and seller because it is our job as the appraiser not to rubber stamp this number but to truly analyze the market in relation to the property. To allow this to alter the appraiser assigned to complete the valuation is to interfere with appraiser independence and “blacklist” the appraiser they don’t like. Anyone who uses this tactic is not only breaking federal regulations, but agents who use these tactics are also in non-compliance with the National Association of Realtors (NAR) Code of Ethics, the Pennsylvania Association of Realtors (PAR) Code of Ethics, the code of ethics within the local Realtor board they belong to and are also subject to a formal complaint with the state real estate commission and the banking commission. This is very serious and is not be taken lightly. The role of the appraiser is extremely important and without our independent, unbiased and objective opinion, human nature would take over and the process would run amuck with underhanded dealings that benefit those who would monetarily gain from this behavior.

For more information regarding Appraiser Blacklisting, click on this link to the article prepared by Working RE through OREP insurance by Isaac Peck.

https://www.workingre.com/how-to-fight-blacklisting/

Price per Square Foot Is not an Indicator of Value

There are examples throughout the country where the value of a property is referenced by price per square foot. Human beings often want a simple concept that is easy to convey and understand. This simple unit of measure takes the sale price of the house and divides it by the square footage of the house to derive at a simple unit measure of assumed value. Even if this was a trusted metric, unfortunately, the square footage might not even be right as there is no universal standard that determines this to make it reliable. Many trusted real estate websites and even real estate professionals refer to this metric when selling or attempting to use a valuation model to determine estimated value or list price. Let me tell you why this is not a good unit of measure to value your property.

First you need to understand that in order for this to make sense, all factors for marketability must be equal across the board. Its like saying that the value of a car is equal to the price per horse power regardless of the brand, style, age and condition. That makes about as much sense as determining value as a cost per square foot. Just like there are multiple factors that make up a car besides the horsepower, there are many factors that make up the value of a property that can include the quality of construction, condition, how many bedrooms and bathrooms or even the size of the lot. When you break down a sale price or assumed value based only on the gross living area of a property, you eliminate the other factors that all contribute to the value of the property.

Let’s look at a hypothetical example which happens quite often in Westmoreland County and use a 2,000 sf 2 story home built in the early 2000’s using average quality components and workmanship. These homes have 4 bedrooms and 2 1/2 bathrooms above grade with a finished family room and full bathroom in the basement.

Example 1- Located in Murrysville and is located in an established residential plan with a lot size of approximately 1/2 acre. The home has been well maintained and has a fully remodeled kitchen and bathrooms. This home also has a 2 car integral garage.

Example 1- sold for $350,000 which calculates to $175.00 per square foot.

Example 2- Located in Washington Township which is just north of Murrysville but is serviced by a different school district. This house is located in a more residential rural area and sits on 5 acres of property. This home is exactly the same as example one except this home did not have any remodeling and it has a 3 car detached garage that was built 5 years ago. Its been well maintained but most items have not been replaced.

 Example 2- sold for $400,000 which calculates for $200.00 per square foot.

So which one is right- $175.00 or $200.00? Actually, neither. As you can see by these examples, while the houses may be the same in square footage, there are many determining factors that contribute to the value of a property. The higher price per square foot for the second example can be attributed to the lot size and newly built 3 car garage but these are factors that have nothing to do with the square footage of the house.

Our job as an appraiser is to determine those factors that contribute to the marketability of a property. These can include location, quality, condition, utility, lot size and additional amenities such as pools, outbuildings, etc. We use multiple methods to determine how these impact the determinations of both buyers and sellers and apply them accordingly. I can emphatically say that we never calculate value using the price per square foot “method” because we don’t have such a method. The only way price per square foot should be applied is when determining the cost to build a structure.

Do you know the size of your home?

Fannie Mae started requiring appraisers starting on April 1, 2022 to measure all single family homes and condominiums using the ANSI Z765-2021 standards. According to FNME, this policy was instituted in order to standardize the method used to measure, calculate and report the GLA (gross living area) and non-GLA areas within the appraisal. It should be noted that this standard only applies to those homes being appraised for loans being underwritten by FNME and only for those properties that are considered single family or condominiums. Other forms of property types and appraisals for private purposes, in house lending and those insured by FHA, USDA and VA have not yet adopted these standards.

In order to create less confusion and advertise the correct square footage, prior to listing your home, have an expert measure your home. There has never been a greater need for accurate reporting of the gross living area than today. Many other market areas in other locations around the country tend to sell properties and make offers based on the price per square foot. Unfortunately, we live in an area where most owners and agents don’t know the size of a home. This should soon be changing as measuring standards apply to all locations.

While appraisers are now required to use these standards, there are other real estate sectors in which there is no reporting standard. This includes real estate agents, county assessors, MLS systems, online public records and other sites that are often relied upon by the public for a resource of property information such as Zillow. In fact, our local MLS system doesn’t even require the GLA field to be filled by the agent. When they do opt to include a number for GLA, they can site 3 different sources for obtaining that GLA and these sources do not have to be verified for accuracy.

Since these standards have been instituted, there is going to be a period of time needed for adjustment. Why? Because when you look at your appraisal, you will find that the GLA reported might be considerably different from what you thought, from what you were told by your agent, from the assessment records or even possibly prior appraisals performed on that same property prior to the standard. Many times the assessment record is wrong and most real estate agents in our area have not been instructed on how to accurately measure a home for the purpose of calculating the GLA.

We have trained professionals here in the office that would be able to assist you so that you can accurately advertise the size of your home.  We offer two services, Basic Home Measurements and Detailed Floor Plans, that will allow you to know the accurate gross living area of your home which could help sell your home.

Once you have these tools in hand, it will give you the edge to help expedite the sale of your home and give your potential buyers an accurate measurement and/or floor plan of your home.

Experience Matters

When making a decision to contract just about anyone to perform a service, one of the most important qualifiers for most is the experience one brings to the table. You really don’t want someone building your deck who has never built one before or replacing your transmission if they have never worked on cars. It works the same with performing real estate appraisals.

I’ve gone back through my files and found that since starting my business in 2009, I have performed over 6,200 valuations for all kinds of clients: lenders, lawyers, accountants, home owners, estates, real estate agents, etc. Add to that the reports I completed during my training process and then as a certified appraiser in a different office for over 8 years.

So if you need an appraisal performed on a piece of residential real estate, what should you look for that will help you to know that the appraiser has the experience necessary to produce a credible assignment result giving you a valuation that is something that can be deemed reliable?

1. How long have they been appraising?

While it is true that newly certified appraisers do have experience performing appraisals because the profession still is constructed as an apprenticeship program, it takes a good 3 - 5 years to feel fully confident in your ability to perform appraisals on all types of properties. The more unique the property, the more experience necessary to produce a credible report.

2. How many assignments have they performed in your market area?

Time appraising is one factor. Experience in your market is a whole different ball game. I have been performing appraisals in the southwest Pennsylvania areas of Westmoreland, Armstrong, Indiana, Butler, Allegheny and Cambria Counties for years. However, I have never performed an appraisal in Greene County. My experience as an appraiser in some areas does not make me an expert in others.

3. Does the appraiser have experience appraising the type of property you need appraised?

Standard “cookie cutter” properties are those properties that are homogenous to the market area. Think about an established residential plan that has over 200 homes in which there is a steady sales activity. These are typically easy to appraise and does not take a significant amount of additional research or analysis. What about a home that was built on a slab in an area where 99% of the homes have a basement? Or a condo in a plan that is the only condominium plan in the entire county and you are lucky if one sells per year such as in Armstrong County? How about a 1 bedroom home where less than 2% of the homes in the county are 1 bedroom homes? These more unique properties take additional effort, time and expertise to be able to know how to extract what factors have the highest marketable indicators and contributory value in the market. Additionally, the report writing takes longer in order to make sure that your intended user understands the analysis and conclusions contained in your report.

When you are in need of a residential real estate appraisal, it is important to know that you can confidently rely on the conclusions. It doesn’t mean you will always agree with the value, but if you choose wisely, you can be sure to rely on the report as a good representation of that properties estimated market value. At Town & Country Residential Appraisals, we can give you that type of confidence for all types of residential properties in the counties we cover. We have the experience that matters!

Murrysville 2022 Quarter 1

It was bound to happen. The signs are pointing to a cooling off from the height of increases we experienced in 2021. While there is still a short supply, this supply is starting to increase. As of this writing on May 23, 2022 there were 84 sales in Murrysville since the first of the year and currently there are 24 active listings, 43 properties with contingent contracts and 17 properties under contract.

2022 Quarter 1 Sales

According to the data, the first quarter of sales in 2022 for Murrysville has shown a decrease in the predominant sale prices of 2.5% per month based on simple regression. This is different from the first quarter of 2021 which was experiencing an increase of 5.6% per month.

2021 Quarter 1 Sales

I don’t have the ability to forecast what will happen in the future and we are entering the cyclical time of year when sales typically are at their strongest. However, the start of this year is possibly showing that prices are starting to correct from the highs and increases posted by 2021 and the balance is starting to tip in favor of more of a balance.