Paul's Appraisal Blog

I've done quite a few appraisals lately for people wanting to eliminate their Private Mortgage Insurance, or PMI.

When people buy a house and have less than 20% down payment, they generally have to pay for PMI to protect the lender in case the loan doesn't get paid back. It insures that the lender will get the entire loan amount back if the sale of the house doesn't cover the loan amount.

Since home values have gone up dramatically over the last couple of years, many people have found that their home is worth over the amount to eliminate their PMI. Often times, this represents a savings of hundreds of dollars a month.

The bank generally wants an appraisal to verify that the loan amount is less than 80% of the current market value.  Most people find it is money well spent: spend the cost of an appraisal and save hundreds of dollars every month!

The appraisals I perform for these types of situations are lender quality and have always been more than adequate.

Feel free to call me or shoot me an email if you have any questions. Thanks for reading!

 

Lately I've been doing listing appraisals to help home owners and investors get top dollar for their homes.  As opposed to a regular lender appraisal, a listing appraisal determines future selling value instead of the value as of the effective date of the appraisal. Taking into account the changing market conditions, market time, and unique characteristics of a particular home, a listing appraisal will anticipate what current buyers will pay.

Typically, the seller will use the appraisal to confirm the value for a potential buyer. Since a listing appraisal may be slightly higher than a lender appraisal, (because it anticipates value instead of reporting current value) many sellers negotiate a price slightly below the appraised value, thereby giving a good deal to the buyers as well as helping to ensure that the property will "appraise" with the lender's appraiser. The bottom line is that the seller will get top dollar!

If you would like to know about listing appraisals or anything else about our appraisal service, feel free to give me call at 760-525-2742 or email me at axiomrea@cox.net.

Tanks for reading!!

One of the most important concepts in residential real estate appraisal is the concept of bracketing values. What this means is that when comparable sales are selected, every attribute of the subject is bracketed above and below by attributes of the comparable sales. For example, if the subject has 2,000 sf of living area, then comparable sales would be selected , say, of 2,200 sf and 1,800 sf so that the subject living area is bracketed, or in between these two values. The same goes for age, lot size, bedrooms and bathroom counts, and condition. This concept is particularly important if a comparable sale of the same size, age, lot size, and condition cannot be found.

The concept of bracketing is pretty much an industry standard. If the adjustments are correct, then the value is accurately attained by adjusting up from a smaller sale and adjusting up from a larger sale, thereby coming to the same conclusion from both ends of the range.

This is important to understand when looking for comparable sales. Most lenders require that the final adjusted value be bracketed both by the adjusted sales price and the unadjusted sales price. In other words, at least one of the original sales prices as the be equal to or greater than the final value conclusion.

For example, if the final value conclusion of the report is $350,000, then one of the original sales should be over $350,000. This is good to know for real estate professionals trying to price a home. When pricing, you should have at least one recent sale above your contract price so that the property will "appraise" with the lender's appraiser.

Anyway, that's just something to keep in mind when trying to figure out the value of your home. If you have any questions or just want more information, feel free to contact me at 760-525-2742 or at axiomrea@cox.net

Thanks for reading!!

 

If you bought your home in the last few years with a low down payment, there is a good chance you have PMI or Private Mortgage Insurance.  Generally speaking, people who purchase with less than 20% down payment and not an FHA loan, carry this insurance which protects the lender in case of a default by the borrower.

The good news is that if your loan is less than 80% of your home's current value, then your PMI can be removed, saving you hundreds of dollars per month.

Since home values have increased by 30% to 50% in some areas over the last couple of years, the chances are very good that you can get your PMI removed.  Talk to your lender to find out the details.

Normally, an appraisal from a licensed or certified appraiser showing the current value is all that is need to eliminate PMI.

If you have any questions about your situation, feel free to call me any time at 760-525-2742. Thanks for reading!

 

It happens. Appraisers aren't perfect and there is no such thing as a perfect appraisal. So what do you do when the appraisal comes back and it appears to be incorrect? What you need to do is point out specific details to bring to the appraiser's attention. First, is the property not accurately described? Are there features and upgrades that are not reported? Second, are there other comparable sales that better represent the value of your property? Remember, the industry accepted guidelines for comparable sales are sales that are no older than 6 months old, within one mile of your property, and within 15% to 20% of your property's living area. You also want sales that are similar in age and lot size and view. You find a lot of information on www.Redfin.com or www.Trulia.com. Once you have your specific information, have your loan officer file an appeal. As I said, appraisers are human so it's hard to know what they will do. I personally have revised a few reports after the additional information was presented, but not all appraisers are willing to admit they may have made a mistake. If you have any questions, feel free to contact me. Thanks for reading!

    When I first started appraising, I was basically in an "appraiser mill". It was a company that had a whole bunch of trainee appraisers finding business and cranking out appraisals. It got to the point where it was trainees training trainees- it was absurd, but very common practice at the time. As a trainee, I got "really good" because I could crank out a report in a couple of hours. Piece of cake, I thought to myself....

    As I eventually got my license and started talking with other appraisers, reading appraisal journals, and taking courses, I came to realize that I was doing a very superficial job and not doing the proper analysis required for each job.  I slowly started changing my methods and improving the quality of the reports. I constantly learned from others and continued to take courses to better understand what I was doing.

    Now that I have been appraising for some time, it takes me quite a while to finish an appraisal. I find my self really thinking and analyzing many aspects of the report and pulling lots and lots of data to verify my conclusions. My appraisals easily take twice as long as when I was "really good" as a trainee. Yet, still, there is a lot to learn. With each year I am constantly learning new things that make my appraisals more accurate and easier to understand.  I may not be as fast as I used to be, but I'm a whole lot better than I used to be, and like a fine wine, will get better with age.

    Thanks for reading!

I would like to personally thank the investors out there that are buying and renovating properties. As far as I'm concerned, they are doing the real estate market a huge service buy taking distressed properties off of the market and returning quality properties that help increase home values and promote owner occupancy in the neighborhoods that they are located in.

If they did not do this, the typical property would possibly be sold to a buy and hold investor, then rented out.  The sale would be a low price which hurts values overall. Then, the property would be tenant occupied, which generally speaking is not as well maintained as an owner occupied home. This, in turn, also hurts home values.

As a home buyer, a renovated or "rehabbed" property is a great deal. What needs to be considered is that if a home is bought for less money, then fixed up later, the owner has to come up with the extra money to make the repairs and improvements. However, if a little more is paid for a renovated house, all of the improvements and repairs are financed with the mortgage and there is little or no money out of pocket. Additionally, the investor doing the renovation can usually get a cheaper price on materials and labor, so you essentially get "a lot more bang for the buck".

Watch out, though, for amateur rehabbers- Some of these people try to do the repairs and renovations themselves and do a poor job. Make sure you do due diligence before you buy.

If you have and questions or comments, feel free to drop me a line.

(Taken from Appraisal Institute News)

As home values dip, so do the value of many high-end home improvements, according to a Jan. 12 National Kitchen & Bath Association survey. Remodeling magazine’s Cost vs. Value Report 2009-2010 found that small-scale, low-maintenance projects and replacements and an emphasis on essentials over extras may lead the way to recovery in the housing market.

The 2009 results indicate that remodeling activity continues downward, despite the 2008 survey declaring the market was about to reach bottom and start turning up. In 2008, overall cost-value ratio was 67.3 percent, down 2.7 points from the year before; in 2009, the ratio was 63.8 percent, a considerably larger 3.5-point drop, according to Cost vs. Value the report.

“It’s not a good idea to over-improve to the degree you have the best home in the neighborhood. In a hyper real estate market, you can get anything; but in a depressed market, the likelihood of recouping many investments is reduced,” Appraisal Institute Immediate Past President Jim Amorin, MAI, SRA, told Remodeling magazine.

John Bredemeyer, SRA, from Omaha, Neb., agrees with implementing minor changes to bring a property up to par with its neighborhood. He told Remodeling magazine that in most cases, “freshening up” jobs, like re-facing cabinets, new flooring or counters, are worth executing.

Appraisers agree that windows and siding tend to have reasonable paybacks in most markets. But some other energy and resource-efficient home improvements may still be too uncommon — and therefore not reflected in usable comps — to appraise near their cost, according to Remodeling magazine.

As for design trends, simplicity is king in 2010. Shades of white, off-white, beiges and bones in kitchens and bathrooms remain the safest bets. Ceramic, porcelain and natural stone tile are popular flooring options. For countertops, granite continues to be all the rage, according to the National Kitchen and Bath Association’s survey.

Cherry is the most popular wood for kitchen cabinets, and pull-out faucets will continue to reign over standard kitchen faucets. French door and freezer bottom are the two most popular refrigerator styles, and the gas range leads the charge in cooking options. Standard dishwashers will be the most common in 2010, according to the NKBA’s survey.

    I read a scary article on MSN.com about people that have bought houses, only to find out that they were at one time "Meth Labs".  Labs used to make methamphetamine, or meth, are incredibly toxic and more often than not leave behind dangerous levels of toxic chemicals.

    Although one might think that these types of houses are only found in lower income areas, along side "crack houses", the fact of the matter is that they have been found in every conceivable neighborhood, from low end slums to "well off", affluent neighborhoods.

    The toxic residue left behind has caused numerous medical problems for the occupants, some of which are very serious, especially for young children. Additionally, once you discover you have a "Meth House", it is very costly for clean up and you cannot sell it without disclosure.

    One of the scariest things is that you cannot tell by looking if your house was a "Meth Lab".  It could appear very clean and well maintained, yet still have dangerous levels of toxic residue. I, personally, am very concerned, especially knowing that San Diego is the Meth capital of the United States.

    I'm no expert, so don't take my word for it. Go on to Google or some other search engine and look up "Meth Houses" and other similar phrases. You will be shocked at what you find.

    Here is a link to Meth Lab Homes, a website dedicated to the problem.

    I am going to do some research and find out if there are any reasonably priced testing services a person could use before close of escrow so I can post on my site.

    Do you have a comment?  Let me know what you think or if you have any good resources. Thanks!!             

(These are samples of "Meth Labs" and "Meth Houses")