IN THIS ISSUE

Redstone regression software - will it work for your appraisals? . . . . . . . . . . . . . . . . . .Page 5Managing yourself to get more appraisals completed and make more money . . . . . .Page 10

What's Up with FHA’s New Manual 4000.1? More Scope Creep?

June 2015–©Appraisal Today–PAGE 1

VOLUME 22 • ISSUE 6 • June 2015

By Doug Smith, SRA, MBA

"The appraisal process provides theMortgagee with necessary informa-tion to determine if a property meetsthe minimum requirements and eligi-bility standards for a FederalHousing Administration (FHA)-insured Mortgage and will serve asadequate security for a specific FHA-insured Mortgage. Mortgagees bearprimary responsibility for determin-ing eligibility and the sufficiency ofcollateral; however, the Appraiserprovides preliminary verification thatthe Property Acceptability Criteriahave been met and an appraisedvalue for the property." Handbook4000.1 Effective date 09/14/2015

Editor’s note: On the minus side,FHA is asking appraisers to do more. On the plus side, FHA is def-initely committed to using certifiedappraisers instead of AVMs andother methods.

Note on links in this article. If youare reading this on your computer,the links are "live". If not, you canopen the document in your computerand click on the links or cut andpaste them.

The Department of Housing andUrban Development published thelong-awaited revised and consolidat-ed 560 page FHA Handbook 4000.1

on 03/18/2015 to a firestorm of com-ments by appraisers who instantlyinterpreted portions of the revisedHandbook as marching orders toenlarge the overall Scope of Work ofFHA appraising to now include thefunctions of a home inspector andprotocols that not only complicatethe inspection and reporting process,but take more time to complete. Thisarticle will address these concernsand summarizes where to find thelatest information.

Extended Effective DateA starting point is to bookmark the

FHA Single Family Housing PolicyHandbook (HUD Handbook 4000.1Information Page Link:http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/handbook_4000-1

On April 30, 2015, FHAannounced that it has extended theeffective date for the policies con-tained in the SF Handbook from June15, 2015 to September 14, 2015. Allexisting Single Family Handbooks,Mortgagee Letters and other policydocuments remain effective until

superseded by specific sections, sub-sections, and/or appendices of the SFHandbook on its effective date. Thisis the website that leads to not onlyupdates and revisions, but toHandbook Resources, Policies andRegulations, including the Handbook,but also Mortgagee Letters andforms.

At this point, it would be well toclick "Subscribe to FHA INFOAnnouncements." Subscribers receiveFHA INFO announcements andinformation about Mortgagee Letterissuances, procedure updates, andtraining & events via email.

Frequently-asked QuestionsThe next stop is to click on

"Frequently-asked Questions." At thetime this article was written this pagewas updated May 15, 2015. Link:http://portal.hud.gov/hudportal/docu-ments/huddoc?id=SFH_HB_4000-1_FAQS.PDF

One piece of essential informationon this page is that the effective dateof September 14, 2015 sets the begin-ning of the implementation of thenew Handbook 4000.1. All current

www.appraisaltoday.com

PAGE 2–©Appraisal Today–June 2015

policies and protocols remain ineffect until September 14, 2015.

The following are key policy revi-sions and clarifications to theAppraiser and Property Requirementssection that are included in the pub-lished version of the Appraiser andProperty Requirements for Title IIForward and Reverse Mortgages(Appraiser and PropertyRequirements)• Properties with a Legal Non-Conforming Use: requiring the appraiser to comment if improve-ments can be rebuilt. • Accessory Dwelling Units: empha-sizing Highest and Best Use to deter-mine property type of classification. • Attic and Crawl Space InspectionRequirements: clarifying that FHArequires an inspection. • General Acceptance Criteria,Property Eligibility, and Non-resi-dential Use of Property: ensuringthat mixed use properties complywith zoning. • Cost and Income Approach forValue: clarifying that ALL appropri-ate approaches must be utilized whenapplicable. • Sales History of Comparables:Requiring three years or more,instead of one year, and requiringdue diligence by the appraiser foranalyzing prior sales of comparableproperties. • Energy Efficient BuildingComponents, Solar Systems, etc.:requiring that contributory value ofbuilding components that enhanceefficiency or energy savings must beanalyzed and reported. FHA requiresthat the appraiser utilize all appropri-ate methods of valuation and doesnot restrict this to only a matchedpairs analysis.

Curiously, FHA confines enumerat-ing the details of changes to theabove list stating that it is importantthat appraisers and mortgagees readthe section in its entirety to under-stand the policy within the context ofthe entire section and the larger

Origination through Endorsementsection.

However, Mortgagees, FHA RosterAppraisers and other stakeholders areencouraged to view FHA's self-paced, recorded Origination throughEndorsement training modules. Thesetraining modules provide greaterdetail on FHA's Appraiser andProperty Requirements policies.

These modules are available athttp://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/sfh/events/sfh_hb_webinars

The following is recommended:MODULE 3A-B: Appraisals(Recorded on 4/2/15): Discusses theProperty Acceptability Criteria forFHA mortgage insurance under thissection and details on the MinimumProperty Requirements (MPR) andMinimum Property Standards (MPS). Webinar/Module duration: 31 min-utes and 117 minutes. Registration isrequired and course material may bedownloaded, saved or printed out.

These modules represent an invest-ment in time. Note that they are nosubstitutes for reading the actualmanual. Therefore, some planning isin order well before the Septemberdeadline. The supporting material isavailable on the website and may befiled away in a file folder or printedout. Part 3B has 93 pages so it is notvery practical to print out the slidesused in the presentations.

One additional site is worth book-marking, the FAQ Bulletin Board.Link: http://portal.hud.gov/hudpor-tal/HUD?src=/FHAFAQ

One proviso in the section onappraisals is that this section is setapart and thus is subject to change atany time. This will require appraisersto set up a system of updating andstaying current.

What Does It Matter?Most everything from the past

Handbooks and mortgagee letters hasnot changed. There are new itemsintroduced and some, like the three

year sales history on ComparableSales, do measurably increase theScope of Work of FHA appraisals.

There is now more emphasis onsuch items as the inspection of atticsand crawl spaces and the requirementto address the condition of built-inappliances.

The focus of all items addressed inthe new Handbook is risk evaluation.

Over time, it has become more evi-dent that there is simply no substitutefor an appraiser in the field on theground reporting on the componentsand elements of the collateral. HUD,in Handbook 4001.1, repeats theimportance of the Three S's. HUDrequires every property to be safe,sound, and secure to be eligible forFHA insurance.

The implied concern is that thepotential borrower not be burdenedwith unexpected repair costs or beexposed to unwarranted health andsafety risks.

Established appraisers, as well asthose considering entering the profes-sion, register concern about thefuture. There could not be anystronger evidence that the sum totalof all the appraisal issues addressedin the new Handbook requires aknowledgeable and competentappraiser going to the property andreporting on all risk factors.

Each appraiser must look at therealities of HUD requirements; evalu-ate some in light of taking on addi-tional liability, address the USPAPCompetency Rule, consider timemanagement and study fee schedules.

In the end, some may decide toleave FHA appraising to others. Thenew Handbook, however, is convinc-ing evidence, that there is real need,in some ways, a beneficial societalneed, for appraisers to remain on thejob representing the lending commu-nity providing their services.

Nature & DegreeIn one of the first FHA phone-in

presentations, there was a lot of talk

June 2015–©Appraisal Today–PAGE 3

about "common sense" on the part ofthe presenters. Callers were chafingabout so-called "home-inspection"issues and asking about specificsabout attic and crawl space inspec-tions.

The reality is that not much haschanged. There is more emphasis onproviding photographs of attics andcrawl spaces and being able to accessthe areas.

This is probably one of the bestexamples of where it is important foran appraiser not to rely on hearsay,but to not only read the section, butto listen to the verbal presentationslisted above.

The instruction to make a head andshoulder inspection of the attic is notnew. What is new is that this accessnot be obstructed and that a clearphotograph of the area be taken. Inaddition, if the attic cannot beaccessed, the appraiser need onlyreport and, in addition, supply theunderwriter with the information asto whether an inspection of the areais appropriate. The appraiser is cau-tioned not to call for an openingwhere one does not exist.

The appraiser is reminded to stayup-to-date on the latest constructiontechniques, particularly when income to advances in energy efficienthomes.

It may be that the attic is encapsu-lated to protect the insulating integri-ty of the home. In this case, requiringaccess to the attic may compromisethe integrity and warranty of the atticarea. In Montana, some older houseshave Vermiculite Insulation, some ofwhich may contain asbestos. In thiscase, when an attic is nailed shut, theappraiser might report that an inspec-tion was appropriate. In every case,FHA lays out the role of the apprais-er and defines responsibilities.

Manufactured homes changesThere are some new items in the

handling of the appraisal of manufac-

tured homes. A manufactured homeis manufactured to HUD standardsand bears a HUD Certification Label(Red tag). The label number must bereported and, if missing, must beobtained from IBTS.org.

The manufactured home is pro-duced to HUD standards. The home,then, may be accepted as built, butany additions whether they areporches, decks or enclosed rooms arenot. The appraiser has no expertise toaccept these additions. If the apprais-er observes additions or structuralchanges to the original house, theappraiser must condition theappraisal upon inspection by the stateor local jurisdiction administrativeagency that inspects Manufactured Housing for compli-ance, or a licensed structural engineermay report on the structural integrityof the manufactured dwelling and theaddition if the state does not employinspectors.

Another wrinkle in appraisingManufactured homes is that at leasttwo of the comparable sales must beclosed manufactured homes. Again,common sense prevails. These salesmay be older sales, but are sales thatsupport market activity of manufac-tured homes.

Property Condition Requirements• Determine the overall quality andcondition of property• Identify items that require immedi-ate repair and are DefectiveConditions (health & safety, structur-al soundness).• Identify items where maintenancehas been deferred, which may notrequire immediate repair.

The nature and degree of any noteddeficiency will determine whetherthe appraiser addresses the deficiencyin the narrative comments area under"condition of the property" or "physi-cal deficiencies" affecting livabilityor structural soundness. The apprais-er must address the nature of thedeficiency in the appraisal where

physical deficiencies or adverse con-ditions are reported and requireinspection, if appropriate.

The watch word is appraisers musttake a "common sense" approach toall that is in the Handbook.

Other examples of conditions thatrequire an inspection by qualifiedindividuals or Entities include, butare not limited to:• Standing water against the founda-tion and/or excessively damp base-ments;• Hazardous materials on the site orwithin the improvements;• Faulty or defective mechanical sys-tems (electrical, plumbing or heat-ing);• Evidence of possible structural fail-ure (e.g., settlement or bulging foun-dation wall, unsupported floor joists,cracked masonry walls or founda-tion); • Evidence of possible pest infesta-tion; or *Leaking or worn--?outroofs. *Chipped, Peeling, LooseLead--Based Paint (on homes built1978 or prior)

The reason for or indication of aparticular problem must be givenwhen requiring an inspection of anymechanical system, structural system,etc.

Summary of Enhancements to Note:• Now requires appraiser to commentif improvements can be rebuilt.• Stationary Storage Tanks - No dis-tinction for above - or below -ground. Rejection is based on a tankof at least 1000 gallons within 300feet of the subject.• Accessory Dwelling Units -Emphasizes Highest and Best Use todetermine property type of classifica-tion. • Attic and Crawl Space InspectionRequirements - Clarifies that FHArequires an inspection?more than just"head and shoulders" if possible.• General Acceptance Criteria,Property Eligibility, Nonresidential

ods of valuation and does not restrictthis to only a matched pairs analysis.

Summary of changes and what theymean for you

In summary, new winds are blow-ing from the U.S. Department ofHousing and Urban Development. The great changeover from the oldHandbooks and periodic Mortgageeletters is coming with greater respon-sibilities thrust upon appraisers in thefield.

The new information requires asolid effort to not only read anddigest the new Handbook, but also toavail oneself of the updated Webinarsand Frequently Asked Questions post-ed on the HUD site.

Scope of Work has become greaterand calls for more preciseness andincreased research which cuts into anappraiser's work day.

Responsibilities have also shiftedfor FHA Underwriters and according-ly, appraisers must expect some inter-pretation conflicts that will arise fromsome of the changes and enhance-ments.

At base, it is all about risk manage-ment. The new Handbook offers solidsupport that risk managementrequires the active participation ofeducated and competent appraisers inthe field. With the renewed emphasison the Three S's, safety, security andsoundness, appraisers are reminded ofthe worthwhile benefits to society andthe important role they play in thecommunity.

About the authorDoug Smith has an appraisal prac-

tice in Missoula, Montana, and is acertified general appraiser doing bothresidential and commercial appraisingwith a specialty in hotel appraisingand feasibility studies. He has anMBA from the University of Montanaand the SRA designation from theAppraisal Institute. He can be con-tacted at hotelman@montana.com.

PAGE 4–©Appraisal Today–June 2015

Use of Property - Making sure thatmixed use properties comply withzoning.• Cost and Income Approach forValue - Clarifies that ALL appropri-ate approaches must be utilized whenapplicable.• Photograph Requirements - Interiorphotos are required, as are photos ofthe air conditioning unit and crawlspace. - Spells out all requirements inone place.• Sales history of Comps - 3 years+instead of 1 year. - Due diligence bythe appraiser for analyzing prior salesof comparable properties.• Measurement and Reporting ofContributory Value of energy effi-ciency components or alternate sys-tems (solar, etc.): - Valuation of SolarComponents is not limited to pairedsales only. • Appraiser must follow properappraisal practice including:Contribution (Principle ofContribution); Contributory Value;Direct Sales Comparison Approach;Cost Approach; Income Approach;and Reconciliation of theApproaches. • High Voltage Transmission Lines -The Appraiser must notify theMortgagee of the deficiency of MPRor MPS if: The Overhead ElectricPower Transmission Lines or theLocal Distribution Lines pass directlyover any dwelling, structure or relat-ed property improvement, includingpools, spas, or water features; or thedwelling or related property improve-ments are located within anEasement or if they appear to belocated within an unsafe distance ofany power line or tower.• Mineral and Oil Reservations - Ifcurrently under lease, the appraisermust analyze and include a summaryof the effect on the property. -Appraiser to comment on:Impairment; Property damage; orEnvironmental Concerns• A separate legal description for thesurplus land is not required. - Highest

and Best Use (HABU) test of addi-tional parcels or larger than typicalsites determines whether excess orsurplus applies (reminder - all FOURtests of HABU).• Leasehold Valuation - Reminderthat appraiser to analyze terms ofground lease and Mortgagee mustensure that appraiser has a copy.• Methamphetamine ContaminatedProperties - Contaminated propertieshave potentially significant environ-mental risks due to use and/or storageof dangerous chemicals on the prop-erty. - If the Mortgagee notifies theAppraiser or the Appraiser has evi-dence that a Property is contaminatedby the presence of methamphetamine(meth), either by its manufacture orby consumption, the appraiser mustrender the appraisal subject to theProperty being certified safe for habi-tation. - The Appraiser must analyzeand report any long-term stigmacaused by the Property's contamina-tion by meth and the impact on valueor marketability.• Valuation Approaches - Reminderto follow Uniform Standards ofProfessional Appraisal Practice(USPAP) - apply all APPROPRIATEmethods.• Roofs Covered with snow -Reminder to report what can be seeninside the property• Manufactured Home Additions -Appraiser to require inspection byState Agency if any Additions orStructural changes are observed.• Manufactured Homes in ApprovedCondominium Projects - Condo mustbe an FHA-approved condominiumproject. - Reporting instructionsrequire use of 1004C form PLUS thecondominium project data as wouldbe found in the project section of the1073 form.• New Building Components -Contributory value of building com-ponents that enhance efficiency orenergy savings must be analyzed andreported. - FHA requires that theappraiser utilize all appropriate meth-

June 2015–©Appraisal Today–PAGE 5

In last month's newsletter I wroteabout 7 regression/statistical soft-

ware programs. They were very dif-ferent from one another.

In future articles I will be review-ing other software. Also, I will writeabout USPAP issues (only AVMs arediscussed in USPAP) and respondingto state board questions about adjust-ment methodology used in regressionsoftware.

I will also write about doing yourown regression using Excel. Plus,what you need to know about statis-tics and regression and where to getinstruction.

The information was provided bythe vendors. This month is my firstreview of Redstone by Bradford soft-ware. Redstone also includes otherfeatures that can help reduce thenumber of requests for more infor-mation. See below.

Many of the features in Redstonewere developed first forCompcruncher, created 5-6 years agoand still in use. This software is usedfor completing driveby and desktopappraisals, and uses statistical analy-sis. Redstone is much simpler andeasy to learn, as it is not used forproducing appraisal reports. Seebelow for Compcruncher vs.Redstone.

Redstone calculates the 1004MC,it imports listings and pendings aswell as closed sales.

Redstone uses MLS data, using acustom MLS export so the datamatches the fields in Redstone.Bradford will give you instructionson how to do it, or will do it for you.

We all want regression softwarethat will calculate all of our appraisaladjustments. The regression softwaredo the calculations, of course. But,the results can be not usable becauseof data limitations - lack of enoughgood data.

Above ground GLA adjustments

are typically the most reliable, assum-ing the data source is reasonablyaccurate. But, for example, basementdata may be limited or unreliable inthe MLS you use, so the regressionsoftware cannot determine a reliableadjustment.

Why did I select Redstone for myfirst review?

I selected the easiest one for me toreview.

Redstone has a predecessor product(Compcruncher) which has been usedfor 5-6 years so it is not a totally newproduct.

I wanted to start with Redstone as ituses multiple regression software,which I first used it 1980 and amfamiliar with it.

I have used Clickforms for over 20years and am familiar with it.

Also, I have known Jeff Bradford,the president, for a long time. He isused to my tough questions.

What does it cost?Redstone costs $5 per property. You

can get a trial package of 10 reportsfor $10.

Redstone - regression plus morefeatures

Redstone was developed byBradford Software, which starteddoing appraisal forms about 30 yearsago and is very familiar withAMC/lender issues.

It focuses on helping appraisersdeal with AMC/lender issues, as wellas providing adjustments. For exam-ple, producing an appraiser selectedlist of comps, similar to howCollateral Underwriter compiles itslist, including allowing underwritersto change the criteria.

Hopefully, this report will cut downon requests for revision or more infor-mation.

What does Redstone include?I was surprised to see that Redstone

does more than calculating adjust-ments.

Redstone includes:• Adjustments using regression - stan-dard multiple regression calculations. • List of your best comps, using amethod similar to CU. This gives theunderwriter/reviewer a list of compsyou consider the best to compare withthe list that CU provides. • 1004MC, based on methodologyfrom the Appraisal Institute.

What is in the 4-page Redstonereport?

The "Advanced AppraisalAnalytics" report includes:Page 1 - Market Area Statistics (age,bedrooms, baths, etc.) for listings andsales, plus a map with data pointsPage 2 - Comparable Sales Selection -criteria used and list of comps plusmap showing market area usedPage 3 - Market Adjustment Factors -graphs and regression results. Timeadjustment percent by month for1004MC. Page 4 - 1004MC

I have attached sample reports atthe end of this newsletter.

Compcruncher vs. RedstoneSince many of Redstone's features

were first developed and tested inCompcruncher, this makes the soft-ware more reliable than recentlydeveloped software.

Learning to use Compcruncherrequired training sessions and quite abit of time as it produces a driveby ordesktop appraisal, plus statisticalanalysis, including a page of regres-sion analysis. A sample report I down-loaded had 19 pages. Compcruncheris used primarily for HELOCs.Bradford developed customCompcruncher reports for its partners.

Redstone reports are only 4 pages.Very little time is required to learn

Redstone regression software. Will it work for your appraisals?

PAGE 6–©Appraisal Today–June 2015

If you decide you want to use it,the price is $5 per property.

Tech supportFortunately, Bradford does not out-

source tech support. I sometimeshave difficulty understanding non-native English personnel over thephone when discussing technicalissues.

For my first call, about why it wasso slow, I received a call back within15 minutes.

My next call was about "massag-ing" the comps to get more adjust-ments. My call was immediatelyanswered.

Neil, the tech support person Ispoke with, was very knowledgeableand patient with my questions aboutbizarre adjustment factors.

Workfile or list of changes forregression to support how Redstonedetermined your adjustments

Reviewers and underwriters (andstate appraisal boards) want to knowhow you did your analysis.Redstone's imported MLS data isavailable in the Redstone appraisalfile. However, when doing regression,there is no history of changes thatyou may have made, such as remov-ing outliers and sales, etc. For now,you should keep a manual list of yourchanges in the appraisal file.

Compcrucher produces a workfile,including the changes you made, soBradford could add the feature toRedstone, if appraisers want it.

What can be printed fromRedstone?

Only the 4-page report can beprinted as a PDF. Other screens, suchas histograms and any thing dis-played on your screen cannot beprinted. You can only get copies byusing a screen shot software such asSnag-it, which is a hassle.

I did not see any way to export thefinal sales and listings, but this infor-

how to use it. The 1004MC is auto-matically produced and you can easi-ly choose your criteria for compselection.

Redstone is $5 per appraisal.Compcruncher is $25.

Importing the Redstone report intoyour forms software

It is a PDF file so you will be ableto add it to your appraisals whateverforms software you use.

If you use Clickforms you caninclude it automatically in yourappraisal reports.

How to see if you will like RedstoneGo to

www.bradfordsoftware.com/redstone/and watch the 33 minute video"Advanced Analytics for Appraisers".

Go to www.appraisalworld.comand join to download the Redstonedesktop software and try the practiceproperties.

I first started with the Redstonesoftware and used several of the 13included practice tutorials fromaround the country. You don't need toworry that they probably are notfrom your local market. They aresamples from conforming tracts,rural, unusual, etc. and give you agood idea of what works, and whatdoesn't work well with Redstone.

I didn't watch the video first - amistake. I strongly recommendwatching the 33 minute video, thenkeep it open while trying one of theincluded sample reports. This is avery easy way to see how it workswithout having to set up exportingfrom your MLS. You can test remov-ing comps, removing outliers, etc.

The only problem I had was that Ididn't know it was slow to load as ituploads all the data, maps, etc. first. Ihave a very fast computer andthought I was doing somethingwrong.

If you like it using the practiceproperties, then purchase the 10 for$10 offer and try it on your data.

mation is saved in your Redstone filefor the subject property.

Bradford chose to keep theRedstone report brief, at the requestof many users. But, the softwarecould be set up to allow includingadditional pages in the report, similarto how forms software allows you tochoose what it in an appraisal report.

Compcrucher's very long reportsincluded lots of this information, sothis feature could be added.

How is the MLS export/import setup?

To import your MLS data, it mustbe "mapped" to Bradford's databasecriteria.

Bradford has mapped many MLSs,so they probable have yours alreadymapped. If not, they will map it foryou.

You can do your own mapping.Bradford will send you instructions. However, I strongly recommend pay-ing $50 to have them do it. Whenthey set up mapping for my MLS byworking through my MLS account,the tech person found a few trickyfields that she had to adjust. BothBradford and I are located in the SanFrancisco Bay Area, so I am sure thetechie had experience with my MLS,but still had a few problems.

MLS search for regression data vs.searching for comps for anappraisal - very different

You choose the criteria, just likewhen you do an MLS search.However, more data is better thanless data. For example, when doingan MLS search for an appraisal I typ-ically look in a range of GLA, sitesize, etc. I also use a smaller area.

For regression this is not recom-mended. I tried using my typical geo-graphic search criteria and did nothave enough data to get good resultson my adjustments. When I expandedmy search, the adjustment resultswere much improved.

You will probably need to see what

June 2015–©Appraisal Today–PAGE 7

works best for your MLS and differ-ent types of properties.

What about non-MLS data?You can import any data, such as

public records or your own database.This is important in areas wherethere is no MLS, MLS is very unreli-able, or there are lots of private sales,etc.

You need to be sure the datamatches Redstone's data fields. Thatcan be done by setting an excelspreadsheet template. Or, you can cutand paste into your Redstone MLSimport.

How far back in time can you go forregression data?

Although many AMCs/lenderslimit how far back in time you cango for appraisal comps, there are nolimitations for regression comps.

For regression, you can go as farback as you need in Redstone.

As we all know, when there arefew sales, or you are appraising in arural area or an unusual property, oneyear back is inadequate. For youradjustments, you can go as far backas you want. Just set up your MLS toexport older data.

The 1004MC only goes back oneyear, so often only one year of MLSrecords is selected by the appraiserfor export.

Redstone adjustmentsThe available Components of

Value (adjustments) within theRedstone and CompCruncher regres-sion analysis include:• Gross Living Area (per sq. ft.)• Bathrooms (each)• Site Area (per sq. ft.)• Garage (per bay)• Carport (per bay)• Basement Area (per sq. ft.)• Basement Finished (per sq. ft.)• Year Built (per year and should be anegative adjustment)• Fireplaces (each)• Pool

• Spa• Sales Date (per day on market, canbe negative or positive adjustment)

Note: Bedrooms are not done asmany appraisers consider it a "doubleadjustment" as number of bedroomsaffects GLA. In my market, numberof bedrooms is very important asthere are many 2 bedroom homes, soI will use another method for thisadjustment.

In addition, there are other marketfactors that are not included or takeninto account within a Redstoneregression analysis. Thesefactors/attributes include:• Condition• Location• View• Quality of construction• Proximity to areas that increase ordecrease the marketability of a givenproperty i.e. busy streets, commercialproperty, schools and parks

Market Conditions (Time)adjustments - 1004MC vs.regression

I was confused about time adjust-ments until I figured out that thereare two very different methods usedin Redstone.

The 1004MC uses median salesprice per month for the past year.

Regression uses the same methodfor time adjustments, GLA, garages,etc. It is determined by the standardmultiple regression software inRedstone, which includes all theMLS data, not just median price permonth.

Don't get me started on the limita-tions of 1004MC! Fannie Maerequires that appraisers use it and hasno plans to change it. On the plusside, before the 1004MC wasrequired, many appraisers would notuse time adjustments as lenders didnot "like" them. This had been goingon for decades in many areas.

How does Redstone determine theaccuracy of the adjustments?

Redstone uses p-values. P-valuedefinition: "A particular statistic thatmeasures the significance of a vari-able in a regression analysis. The sta-tistic is important in inferential statis-tics for hypothesis testing in regres-sion analysis. The PValue is a mea-sure of the randomness of a compo-nent used in the regression analysis."

"When evaluating p-scores, a valuecloser to 0.00000 is more reliablethan a score closer to 0.99999. A p-value of <.05 means the probabilitythat the recommended adjustment israndom and is quite small. For eachof the calculated Components (adjust-ments), the significance of theComponent of Value will range from:• Very High Less than 0.01• High 0.05 through 0.0099• Moderate 0.15 through 0.0499• Low 0.3 through 0.1499• Very low 0.99 through 0.2999• Insufficient Data• Excluded (due to MLS inaccuraciesor negative value.”

I really hated getting very few lowp-value scores. This meant I could notuse the adjustment. I definitely willhave to practice setting my geograph-ic area in different ways.

Factors affecting adjustments"Many factors contribute to the

results obtained from the data:• Variety of property configurations• Accuracy• Quantity of properties included inthe sample• Market variabilityNote: When selecting the neighbor-hood for the analysis, select ALLproperties of the same type, SingleFamily, Condominium, etc. Theanalysis is of the surrounding proper-ties and is unrelated to the selectionof comparable properties. DO NOTexclude properties based on the attrib-utes of the subject property."

What about adjustments (ProbableValue Range) that don't make anysense?

On my first tests, I had GLAadjustments much higher than I typi-cally use. To me, it meant I needed torethink my adjustments as GLA is avery straightforward number thatalmost all the properties will have. (Iexcluded properties with no GLA.)

When changing the data search cri-teria, it was still higher than I havebeen making with values of $164 and$194 per sq.ft. I will check usinganother method, but I am sure I willneed to increase my adjustment. Ofcourse, the smaller the home thehigher the GLA adjustment, whichfew multiple regression softwaresconsiders.

Time adjustments are the easiestadjustments to make. You shouldalready have a good idea of whatthey are in your market. A few timesI needed to expand my geographicarea to get a larger sample and alower p-value.

Other adjustments could not becorrect, such as a $73,000 fireplaceadjustment. In my market, due to airquality issues, few people use theirfireplaces. The median sales price formy market is around $750,000. Itwas some type of data issue Iassume, maybe because there was nota lot of variation in the number offireplaces in the properties.

The garage adjustment was$50,000. This may be accurate asthere are many homes withoutgarages (or off street parking)because many homes were built priorto 1920. The garage adjustment Ihave been using may be low. I willuse other methods to check thisresult. Matched paired sales wouldprobably work for this adjustment.

The bathroom adjustment was$35,000. My adjustment may be toolow. Many homes in my market haveonly one bathroom. A second bath isdefinitely important to buyers.Matched paired sales would probably

work as a double check. See what happens in your market.

Try different search criteria and dif-ferent properties.

Where does Redstone work well?Just like AVMs, it works well in

conforming tract areas with relativelynew homes.

In my city there is a small projectwith homes built since 1975 and amedian price of $935,000. The sam-ple size was 116 properties.

Three adjustment factors had .0000p-values: GLA, site area, year builtand sale date. No other adjustmentsworked, such as bathroom and fire-places, probably because there is notmuch variation as the homes are verysimilar. There are no basements.

No adjustments for view were cal-culated, which is a major factor inthis market. Another method wouldhave to be used.

Regression - the key to accurateresults is the data

Why aren't AVMs, such asZillow’s, very accurate? The Data.Property data varies widely and hasmany, many different ways of cate-gorizing. There are some small areaswhere MLS data is not online orthere is no MLS data available.

I'm sure your local MLS informa-tion drives you crazy sometimes.

Public records has very limiteddata, may not be accurate, and varieswidely. For example, assessors'offices have different ways to mea-sure GLA. It may, or may not, matchwith how GLA is determined in yourmarket.

Redstone imports MLS data fromyour MLS vendor. As we all know,MLS data varies widely amongMLSs and can vary widely amonggeographic areas, depending on theaccuracy and reliability of the datasource.

There are no national data stan-dards for MLS.

MLS is data is used for listings in

the 1004MC. In my geographic area, some

agents are accurate and some "mas-sage" the information for listing pur-poses.

As a regular user of an MLS, youknow which cities, agents, etc. arethe most reliable.

With Redstone, you can change theMLS data before importing or afterimporting.

Where did the name Redstone comefrom?"Redstone missiles played an impor-tant role in the early years of thespace race. Modified Redstone rock-et technology flew as both Jupiter-Cand Mercury-Redstone space launch-ers."

Regression Fundamentals -Bradford's very good 11-pagediscussion of regression issues

The quotes above and below arefrom this document. To download it,go to http://appraisalworld.com/i2/docs/Redstone-regression5-15.pdf

Or, you can access it atwww.appraisalworld.com member. Itis free. Click on the RegressionOverview icon.

Objective vs. Subjective Qualities within a Regression Analysis

"Regression analysis does not takeinto account, condition, location,quality or views. It is advisable notto combine properties with substan-tially different qualities with othertypes of properties due to their hav-ing qualities not accounted for withinthe regression. Foreclosures, fixers,lake view properties, gated commu-nities and exclusive communitiesmay be removed from the analysis,unless these types of propertiesare representative of the market.Exclusive communities may includebut are not limited to senior housing,low income housing or golf coursedevelopment. "

PAGE 8–©Appraisal Today–June 2015

June 2015–©Appraisal Today–PAGE 9

"In some circumstances perhapswhen there is not a lot of activity in amarket, the appraiser may go back24-months (or further) instead of 12months to obtain an adequate numberof sales in order to complete ananalysis on exclusive communities.Sample sizes can range from 40 to300 properties. Normally, the largerthe sample the more accurate theanalysis."

Sample size and what to not include"To obtain an adequate sample, a

larger geographic area may be need-ed that is larger than would be con-sidered appropriate for the selectionof comparable properties. A largersample is recommended."

"A larger sample size is more like-ly to provide adjustment ranges formore Components than a smallersized sample."

"Properties to consider removingfrom the sample include:• Foreclosures and other non-arms-length sales may be removed fromthe sample if they are an insignifi-cant part of the market.• Properties significantly differentfrom the other properties in the mar-ket due to: view, location or attribute(Gated Community, SeniorCommunity and Golf CourseCommunities).• Ranch properties and Farms aredifferent that smaller lot propertiesand are difficult to compare using aregression analysis due to the com-plexity of their configurations.

See the links above to downloadthe full report.

Using the Regression Analysis forthe Subject Property

"When the analysis is done, thesubject property is not even a consid-eration. Basically, components ofvalue are determined by using all theproperties in the area to determine avalue range for each component. Inorder to complete an analysis, varietynot similarity is needed. Regression

works best when the neighborhood ismade up of various types of homesrather than similar types of home...."

Some Limitations of RedstoneAnalyses

"Rural areas with limited numberof sales may need to cover a largerarea than what would be used forselecting comparables. Often severalcommunities are combined."

"Manufactured homes, multi•fami-ly, income and commercial proper-ties are outside the scope of theregression analysis used in Redstoneand CompCruncher. Properties ofthis type require a different configu-ration of components of value tocomplete a viable analysis on proper-ties of this type."

"Regression analysis is not appro-priate for all SFRs and condos in allsituations. Properties located at thehigh or low end of a value range aremuch harder to evaluate usingregression analysis. Acreage proper-ties with additional attributes, suchas, out-buildings are inappropriatefor regression analysis."

"Appraisers will develop a feel fortypical PVRs upon completingnumerous regression analyses withintheir market area where sufficientdata is available to calculate PVRswith a satisfactory p-value."

"Unusually high or low adjustmentvalues may be calculated throughregression analysis. Though the cal-culations are correct mathematically,the appraiser may opt to exclude thecomponent of value from the analy-sis. If used, the appraiser may statethat the adjustment may be affectedby other factors that result in anunusually high or low value for thespecific component of value."

"The regression analysis will notprovide information fordetermining all adjustment due to thequantity and quality of availabledata. Some adjustments, such as con-dition, location, view and etc., are

beyond the scope of available dataobtained from your local MLS."

"The appraiser will need to com-bine personal knowledge of the mar-ket, results of other relevant regres-sion analyses, and the data providedwithin a given report to determine theadjustment amounts used for eachproperty valuation."

"Though regression may notalways provide an adjustment forevery Component of Value it is amethodology the appraiser may useas evidence of applying mathematicalanalysis to the available market datato determine adjustments."

Note: There are some very goodexamples of how the data affects theadjustments in the document.

Should you use Redstone? Read this article and see if

Redstone will work for you. Try afew of the sample properties. Buy the10 reports for $10 and see if it worksin your area.

Even if you decide to not useRedstone for your appraisal adjust-ments, you will learn a lot about mul-tiple regression by using the sampleproperties in the Redstone download-able software. Plus, the document ref-erenced above has very good tipsapplicable to all regression software.

If you want more information, Goto www.appraisalworld.com/redstone.Registration is required but is free.

PAGE 10–©Appraisal Today–June 2015

My time management article inthe April, 2015 issue focused on

practical tips you can use today to getmore appraisals done, such as cuttingdriving time and handling those peskyAMC phone calls.

This month I focus on more basicmethods - changing your behavior tobe much more efficient and get morework done in the same amount oftime.

My next topic will be reducingstress, which affects you personallyand in your business. When you arestressed or worried because of toomuch to do, your productivitydecreases. More important, it affectsyour mind and body, plus can makeyou irritable and "snap out" at people.

Why should you be worried abouttime management when you're reallybusy? Time is your only non-renew-able resource. Once it is gone, youcan't get it back. With very strongdemand for appraisal services, now isthe time to make money to save forthe next slow period. Don't let yourclient push you into missing what isimportant to your family, such as vis-iting elderly parents or a child's base-ball game.

There is nothing new in this article,except using appraisal examples. Thetechniques below have been taughtfor many years in time managementclasses. I took a one day class in 1980for people working for businesses orself employed. It changed my life,both business and personal. There aremany books, online classes, webinars,etc. available now.

The key to time management ismanaging yourself

It's not other people who controlhow you use your time, it's you! Thismight require changing habits you'veestablished over a long period oftime. You also do it because you wantto have more time for important activ-ities, such as family, friends, hobbies,education, or just relaxing. And, havea less stressful business. You want towork smarter, not harder.

If I am stressed out, it is my fault,not my clients', for not managing mytime better.

The 4 essentials of time managementThis is the "classic" list of what is

important. 1. Set goals and priorities.2. Make a daily to do list.3. When working on the to do list,finish higher priorities first.4. Get to work on what needs to bedone and do it now.

For example, I want to get out 2appraisals for clients today. I need towrite them up and send them out.Client X is a very good client andgets top priority. Client Y's appraisalis much more difficult and gets 2ndpriority as it may not be able to becompleted today. If it is not done, itmoves to the top of the to do list fortomorrow.

Another example: 3 of my clientswant updated E&O information. I"batch" the requests and do them allat the same time, taking much lesstime than if done one by one. I sched-ule them for Friday, with a relativelyhigh priority, so I will get it done.

Procrastination and priortizing tasksI start every day with one or more

"to do" lists. I have one list for "mustdo" today and another list of tasksthat must be completed within severaldays.

On my list, I start with the "mosthated" tasks to get them out of theway.

Time logsAll time management experts rec-

ommend making a time log. Anexcellent way to start controlling yourtime is to take a time log for one ortwo weeks.

Take a piece of paper and divide itinto categories of time such as travel,writing appraisals, making phonecalls, etc.

Write down at least once per hourwhat you have been doing. If youhave multiple tasks you can do it in15 minute intervals.

Don't even start the log if you can'tcommit to filling it out at least onceevery two hours. Very few people canremember the details of what they dolonger than a few hours.

You will be very surprised at howyou spend your time. See what yourtime wasters are and when they occur.

Save time and reduce stress byprioritizing

For appraisers, time is money.When you're busy, every minutecounts. Spend your time on what isimportant, not on the person whocalls on the phone.

Ever since I took my first timemanagement seminar 20 years ago, Ihave been using priority or "to do"lists. Now that I am very busy theykeep me from going completely crazy.

I make one up the day before forthe next day. I continuously revise itthroughout the day, as I finish sometasks and decide not to do others. Ijust use pages from a small "scratchpad" and keep them with me.Sometimes I use multiple "to do"lists, for personal and business.

Without one, you drift through the

Managing yourself to get more appraisals completed and make more money

June 2015–©Appraisal Today–PAGE 11

thing, but it is critical to effectivetime management.

Overcoming procrastination tips As you use your to do list over a fewweeks, you will see certain tasksseem to take much too long to getdone.

We all procrastinate. Unfortunatelyprocrastination often results in takingmore time, at a lower quality perfor-mance, when a task is left until thelast minute.

Procrastination is a corollary to alack of planning. Ways to avoid pro-crastination are:• Setting your own deadlines• Starting and completing a difficultor unpleasant task or breaking itdown into manageable segments• Setting priorities, and focusing onone problem at a time and not lettingyourself get distracted.

One way to get started conqueringprocrastination is to start your day byprioritizing and doing the mostunpleasant task on your to-do list.You will feel relieved your don't haveto worry about the task any longer,and confident that you're conqueringprocrastination.

Doing this every day will make it ahabit, replacing fear and guilt for notgetting the job done with a positivefeeling of accomplishment. You'llstart your day with a good feeling andwill look forward to getting tasksdone.

Procrastination will be conquered.I have done this for many years. It

works!!

Procrastination and excuses tipsfrom Doug Smith

Putting things off for many is thesingle most identifiable time waster.Delay not only wastes time, it isdraining on energy and thoughts withmuch of the time spent worryingabout what needs to be done.

It becomes an endless cycle disap-pointing both clients and the appraiser.

The general watchword is if you

Don't be a "fire fighter"A vital concept in time manage-

ment is the difference between impor-tant and urgent tasks. Important taskshave long-term results, like market-ing, catching up on periodicals read-ing, or learning a new software pro-gram.

Urgent tasks such as making aphone call, completing an appraisaldue in a few days, or getting inkjetcartridges at the office supply storecan always take up all your time. It isvery satisfying to put out fires. Theybring immediate results. But, we allknow there are probably more impor-tant tasks we should be working on.

Set aside time for important tasksFor many years, I have worked in

the office early in the morning or inthe evening, or in my home office, sothat I can complete important tasks.

In order to complete your importanttasks, you must set aside the time.Urgent tasks will always be able totake up all your time if you let them.

One way is to select a certain timeperiod per week or per day, with nointerruptions allowed. If there are toomany distractions in your office, workat home during certain time periodsor come in early. The key is settingaside the time and not backsliding.You are trying to establish a newhabit.

Distractions are also a problem ifyou work at home. Telling your chil-dren not to interrupt you for a fewhours, or working when they are notat home can work. Separating workand home tasks can be tough whenyou only have a home office, but itmust be done.

You can't do everythingCertain tasks will stay on your to-

do list for some time without beingdone. Take those tasks off your to-dolist. It's very hard to try to do every-

day, "putting out fires" and not reallyaccomplishing what you wanted to.You cannot do everything. Some taskswill not be done.

Start your day with a to-do list (ordo it as the last thing you do at theend of the day before). Prioritize yourlist. When prioritizing, both importantand urgent tasks must be listed. If youonly list and do the urgent tasks,you'll probably won't getaround to any important tasks.

Over emphasized work life - tipsfrom Doug Smith

Appraisers generally underestimatethe fatigue factor in their lives.

Appraisers with travel time andheavy inspection schedules canbecome pressed for time to relax andre-energize.

The basic principle behind workingproductively is to not work whenbeing tired does not hinder thinking.The words "time off" and "vacation"should not be a foreign language inthe appraiser's vocabulary.

The most important software in theappraiser's office is themselves.

Why run on overload when there isa simple alternative to planning andinserting time to refresh and re-charge?

Sooner or later health may sufferwhen the crisis point is reached andtime off will be forced and it willprobably occur at the wrong time.

One casualty of an overly hecticschedule is sleep. Sleep is fundamen-tal to health and it is essential thatappraisers be aware of the need forsufficient sleep and rest. Take a sleepinventory over a couple of weeks andabide by the results of this survey.

Appraisal TodayISSN 1066–3900

Appraisal Today is published 12 times per year by Real Estate Communication Resources.

Subscription rate: $99 per year, $169 - 2 yearsPublisher

Ann O'Rourke, MAI, SRA, MBAann@appraisaltoday.com

Subscriber ServicesTheresa Lua

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Appraisal Today is sold with the understanding that the publisher,editors, and others associated with the publication are not engagedin rendering accounting, legal, or other professional services. Itdoes not attempt to offer specific solutions to individual problems.Questions about specific issues should be referred to the appropri-ate professional for analysis. ©2014 by Real Estate Communication Resources. All rightsreserved. The contents of this publication may not be reproducedeither whole or in part without consent.

PAGE 12–©Appraisal Today–June 2015

don't start, you won't finish. Thesomewhat timeworn cliché states:"No one plans to fail, they just fail toplan."

Most authorities on time manage-ment agree that planning must operateat two levels, the first being an over-all plan of personal goals and priori-ties, preferably re-evaluated annuallyand when this is in place then main-tain a clearly set out daily plan.

The overall plan includes lifegoals, family values, and financialprojections. These incorporate a per-sonal value system. When it comesdown to the day-by-day challenges,these overall goals set the tone for thedecisions made each day.

That decision to make the lastinspection photo of the day or attenda son or daughter's soccer match aremore easily made under the glare ofan overall plan that sets out prioritiesfor family interaction and values.

In the end, no matter how good the

MBA Loan Volume Application Index – 1/13 to 5/15

200.0

400.0

600.0

800.0

1000.0

1200.0

1400.0

1600.0

1/132/13

3/134/13

5/136/13

7/138/13

9/1310/13

11/13

12/13

1/142/14

3/144/14

5/146/14

7/148/14

9/1410/14

11/14

12/14

1/152/15

3/154/15

5/15

Market Index 100 in 1990

system or credible the expert, the realdeep down cause of procrastination issome undefined fear. When faced withthe job of finally finishing a project,there may be something in the assign-ment that is causing apprehension orunseen dread.

Fight or flee are the two naturalinstincts in man. Procrastination isoften fear based and is nothing morethan flight.

Helping your assistant (or yourself ifyou don't have an assistant)

Many years ago, I had a secretarywho trained me in how to help her.When she came into the office in themorning, I had a priority list on herdesk.

I still use that method today. In myoffice, there is more work that we canever get done due to the current highappraisal volume, so the list is veryvaluable to my assistant.

Where to get more informationTake a live time management semi-

nar or class in your area. Do a googlesearch. I took a one day class for busi-ness people in 1980 and am still usingthe techniques I learned there. It

changed my life. If there are noneoffered locally, take an online class.

There are many books written ontime management. Just go towww.amazon.com.

Be sure to get classes and booksfor small business owners, if possi-ble. But, all the classes teach thesame techniques, whether for yourpersonal or business life.

As you can see below, mortgagevolume peaked in 1/15 and hasgone up and down since then.There are still many people whocan refi but haven’t.

As long as rates stay low therewill be lots of appraisal business.When the Fed announcesincreased rates, there will be amad rush to refi.

Produced by RedStone Software 800-622-8727

File No.

BorrowerProperty AddressCity County State Zip CodeLender/Client Address

MARKET AREA STATISTICS

Sales in Market Area Listings in Market AreaTotal Sales Researched within Market Area: Total Listings Researched within Market Area:

Ranges Subject Min Max Ranges Subject Min MaxDate Range: Date Range: Sale Price: List Price:Gross Liv Area: Gross Liv Area:Site Area (sqft): Site Area (sqft):Bsmt Area: Bsmt Area:Bsmt Fin. Area: Bsmt Fin. Area:Age: Age:Bedrooms: Bedrooms:Bathrooms: Bathrooms:Car Storage: Car Storage:Fireplaces: Fireplaces:

MARKET AREA MAP

Sales: Yellow Listings: Green Outer Circle: 1 Mile Radius Red Area Denotes Appraiser Defined Market

Redstone SampleClient No

James Conrad1 Main Street

Bakersfield Kern CA 93304Bank, Inc. 10 Oak Drive, San Jose, CA 95138

93

4/28/2014 4/24/201550,000 245,000

1,092 704 3,0776,543 6,000 39,654

0 0 00 0 059 36 963 2 7

1.0 1.0 4.01 0 31 0 2

27

11/3/2014 4/17/201584,900 285,000

1,092 750 2,7626,534 5,107 40,443

0 0 00 0 059 52 1003 2 5

1.0 1.0 4.01 0 41 0 1

Produced by RedStone Software 800-622-8727

File No.

BorrowerProperty AddressCity County State Zip CodeLender/Client Address

COMPARABLE SALES SELECTIONThe initial selection of the comparables was performed analytically using a rating system based on the specified property characteristics, theweight assigned to each characteristic by the appraiser and the filtering specifications also set by the appraiser as shown below. The finalselection of comparables utilized in the analysis was determined by the appraiser and is based on the appraiser's experience and knowledge ofthe local market and of the properties under consideration. Weighting factors range from 1 to 10, with 10 conveying the most important factor.

Characteristics Compared Weight Properties Included In Analysis Based On These Filters

Top Sales AnalyzedNo. Score Address Prox. Beds Baths GLA Age Sales Price CommentsSub

Location Map

Redstone SampleClient No

James Conrad1 Main Street

Bakersfield Kern CA 93304Bank, Inc. 10 Oak Drive, San Jose, CA 95138

Proximity 10Date of Sales 10Gross Living Area 5Age 3Bathrooms 7Car Storage 3

GLA between 1200 and 1650 sqft.Site Area between 6000 and 9000 sqft.Age between 49 and 69 years.Bathrooms between 1 and 2 rooms.Pool equal to 0.

1 Main Street 3 1 1,430 591 1341 1712 Stillman Ave 0.13 3 2.0 1,334 60 161,000 Remodeled - Superior Condition2 1331 2116 Custer St 0.30 3 2.0 1,385 56 140,000 Most Comparable3 1323 1908 Cecil Brunner Dr 0.50 3 2.0 1,503 67 150,500 Superior Size4 1315 1904 Le May Ave 0.27 3 2.0 1,300 60 139,900 Very Comparable5 1306 1800 Custer Ave 0.22 3 2.0

1,30060 137,000 Very Comparable

6 1303 1925 Le May Ave 0.32 3 2.01,407

53 140,000 Most Comparable1294 2212 La France Dr 0.44 3 1.0 1,340 60 130,000 Swimming Pool1268 1913 Montgomery Ave 0.06 3 1.5 1,456 59 110,000 Inferior Condition1203 2401 Holden Way 0.36 3 2.0 1,383 58 112,900 Large Lot / Superior Bedrooms1194 2213 Bradley Ave 0.26 3 2.0 1,329 59 160,000 Superior Bedrooms1193 2208 Holden Way 0.27 3 2.0 1,354 58 134,000 Superior Quality1085 710 Butler Rd 0.73 4 2.0 1,235 59 130,000 Superior Bedrooms1058 1913 Bradley Ave 0.10

42.0 1,334 60 140,000 Out of immediate neighborhood

1040 2006 Lester St 0.752

1.0 1,234 65 95,0001019 2501 Diamond Ct 0.66 3 2.0 1,507 54 155,0001017 1819 Fremont St 0.06 4 2.0 1,334 60 140,9001003 2217 Bradford St 0.81 3 2.0 1,429 67 149,900945 1724 Terrace Way 0.88 3 2.0 1,290 67 124,000933 1012 Paloma St 0.71 3 2.0 1,432 60 136,000926 710 Wayne Dr 0.72 3 2.0 1,518 59 159,500

File No.

BorrowerProperty AddressCity County State Zip CodeLender/Client Address

MARKET ADJUSTMENT FACTORS A regression analysis was performed on the properties within the subject's market. A summary of analysis is described below along with theproperty characteristics that were determined to be statistically significant in this market. The final determination of the adjustment factors usedin the Sales Comparison Approach were based on the results of the regression analysis, the significant market characteristics and the appraiser'sexperience and knowledge of the local market.

Regression Analysis Results Actual to Predicted Sales Price# of Properties (Sample Size):R Squared:Standard Error:

Accuracy Distribution

Most Likely Value RangeFeature Contributions to Value Units P-Value CommentsValue Min Max

COMPARABLE TIME ADJUSTMENT FACTORSComparable No.: Comp #1 Comp #2 Comp #3 Comp #4 Comp #5 Comp #6Sale PriceSale DateTime Adjustment PercentTime Adjustment Factor

TIME ADJUSTMENT PERCENTAGE BY MONTH FOR THE LAST 12 MONTHS

Redstone SampleClient No

James Conrad1 Main Street

Bakersfield Kern CA 93304Bank, Inc. 10 Oak Drive, San Jose, CA 95138

7385.10%

8.33

Neighborhood Base Value 52,041Gross Living Area 63 60 67 $/sqft 0.00000Sale Date -33.37 -46.27 -20.48 $/day 0.00865Garage 6,000 4,683 8127 $/unit 0.00024

161,0004/24/2015

-3%-4,830

140,0004/22/2015

-3%-4,200

150,50012/17/2014

-4%-6,020

139,9001/16/2015

4%5,596

137,00012/3/2014

-4%-5,480

140,00011/7/2014

-3%-4,200