My New Blog

I have been asked twice over the past year to complete appraisals involving "exterior only" inspections of the subject property.  Each time found some data in public records which made me question whether an "exterior only" appraisal would be reliable.  The reason I am writing this is to make buyers, lenders, and fellow appraisers aware of the risks of "exterior only" appraisals.

The first assignment was for the purchase of a single family residence in Wrighstville Beach.  I noticed a significant difference between the square footage shown in tax records (945 sq ft) and on the MLS listing for the property (1350 sq ft).  I contacted the lender and suggested an upgrade to a "full appraisal" which would involve an interior and exterior inspection.  I measured the dwelling and found the living area to be 952 sq ft.  I called the listing R.E. agent who said "I must have not pulled his tape measure tight".  I would bet he never visited or measured the property.  The potential buyer was living in Washington DC at the time.  Was the buyer under the impression he was buying a 1300+/- sq ft home?  I bet I would have had some questions to answer if I hadn't measured the home and appraised it as if it were 400+- sq ft larger than it really was.

The second assignment involved what Brunswick County tax records state is a "off frame modular home".  I completed an interior and exterior inspection and found the dwelling to a be a manufactured home.  I then spoke with the owner who told me they had their home in Myrtle Beach at one point and moved it to its present site.  I bet you can't do that with a modular home!  Again, if I had not completed an interior inspection of the property I would have misled the user of my appraisal report. 

Be aware of the appraiser's assignment conditions.  My recommendation would always be to obtain an interior inspection on all properties unless not feasible due to hostile occupants etc. 

I am in the process of completing an appraisal of a single family residence in Sneads Ferry, NC.  I just completed a market analysis of the area and found some interesting statistics.  It appears Sneads Ferry is a "hot area". Market statistics for single family homes between 140K and 190K and between 1000 sq ft and 1900 sq ft built after 2000 show these properties are in demand.  Statistics show supply and demand to be in balance with a typical marketing time of less than 3 months. 

I started working on this assignment on Friday and at a dinner party on Saturday I met a Marine from Camp Lejeune.  This Marine said southern portion of Camp Lejeune is currently being developed and is expected to be the location where many Marines will be working each day.  It was his opinion Marines are now preferring to be south of the Base which is leading to many Marines choosing to buy in Sneads Ferry.  He mentioned traffic issues and reducing commuting time as 2 reasons Marines are making Sneads Ferry home.  

The North Carolina Professional Appraisers Coalition (NCPAC) is holding a meeting on Monday in Raleigh, NC and one of the topics to be covered is the new Landsafe Appraiser Services Agreement (ASA).  Many appraisers are concerned over some aspects of the agreement including the following: 1. Lower fees than what is considered "customary and reasonable" in North Carolina.  2. Carrying a higher minimum of E and O insurance than in previously agreed to agreements  3. Keeping appraisal records for 10 years (double what is required by USPAP). 4. Indemnity for many reasons.  5.  Open door policy where appraiser's office can be audited at any time.

I have read the agreement I have chosen not to sign the agreement at this time.  I am also concerned over these issues.  First, the published Landsafe fees are less than what appraiser's standard fees were in the 1990's.  The fees are lower than the published VA fees.  Any survey I have seen has shown higher fees then their published fees.  There are so many more requirements on appraisers now than in the 1990's.  In addition, inflation has occurred over time.  It appears appraisal fees which would be considered "customary and reasonable" should be higher now than in the 1990's.

Second, why would an AMC require more E and O insurance, require an appraiser to keep records for 10 years, and require the appraiser to submit their office and records for "auditing" at any time.  It sounds to me that they are preparing for future litigation with appraisers. 

I plan to attend the meeting and will report back with details.