When you sell your home, appraisers use comps (comparable market sales) of local properties sold within the last six months to value your home. With today’s rapidly rising seller’s market, six-month-old information is ancient history. Appraised value does not always equal the true market value, or what the home will sell for on the open market.
Realtors will give you a comparative market analysis, an informal estimate of market value based on comparable sales. Lenders, on the other hand, will use the appraised value to determine a new mortgage amount. Some lenders require that the stated property value covers the mortgage amount plus their selling costs in case of foreclosure. For this reason, a sale may fall through if a home sells on the open market for more than the appraised value, which often happens in bidding wars over hot property.
We learned the importance of securing a sufficiently high appraisal when we sold a rental property in Lake Elsinore, California. We listed the house for $ 234,700 on Friday. By Monday morning, we had three offers: $ 245,000, $ 255,000, and $ 260,000. We accepted the one for $ 255,000 because the buyers had $ 80,000 down, reassuring us that they had sufficient funds.
As usual, the lender sent an appraiser to review the property. This busy appraiser didn’t take the time to view all the upgrades we put into the custom-built home. Even worse, he used only comps from the local one-mile radius. Because this home is close to a shopping district, there were not many homes sold in this limited area during the six-month period.
The appraiser used comps six months old; during this time housing costs in Southern California appreciated around thirty percent. Sales from six months previous should have gone up in value by $ 30,000 on a $ 200,000 home. This means that our home should have been worth $ 250,000 to $ 260,000, especially since buyers are willing to pay this price on the open market. To increase the value of this home, at the time there was not another three bedroom home listed in the area for under $ 250,000 (excluding manufactured homes). However, the appraiser valued our home for only $ 230,000 — and we would have lost the sale if the offer did not include a sufficient down payment.
Because a low appraisal can kill your sale, finding a buyer with a large down payment provides you with a safety net. You may also choose a buyer with strong credit who doesn’t have to put a large percentage down. If you think that your home’s appraisal could become a problem, make sure you don’t include a clause in your sale’s contract which states “subject to appraisal.”
How to Avoid Low Appraisals
Hire your own appraiser before the sale. Then ask your buyer’s or lender’s appraiser to review your appraisal.
Retain the option to approve your buyer’s mortgage lender. Make sure that the buyer doesn’t use a lender with a history of deliberately underestimating property values. A good real estate agent should know which lenders routinely under value homes.
Keep records of repairs and upgrades, including costs. Take “before” and “after” photographs. Create an organized journal with a listing of expenses and include pictures to show to the appraiser during the appraisal appointment. Stage your home for the appraiser like you do for buyers.
Secure your own property comparables to make sure the appraiser uses complete information. Call real estate agents with homes in escrow and get the sales prices. Make a list of these properties with the agent’s phone numbers and give it to the appraiser.
What to Do When Your Selling Appraisal Comes in Too Low:
Ask for another appraisal.
Protest the appraisal with documentation of your upgraded expenses.
Have the buyers make a larger down payment.
When you sell or buy real estate, remember that the certified appraisal is just one person’s opinion of the value of your home. The opinion that counts for you is the buyer’s: you want to be sure the buyer values your home above all others.
Copyright (c) 2005 Jeanette Fisher, All rights reserved.
Jeanette Fisher, author of Sell Your Home for Top Dollar–FAST, Staging Houses for Top-Dollar Sales, Doghouse to Dollhouse for Dollars: Using Design Psychology to Increase Real Estate Profits, and other real estate and interior design books, teaches Design Psychology and real estate investing seminars. For information on Design Psychology, visit: http://designpsych.com/. For help selling houses, articles, and home staging tips, see http://www.sellfast.info/.
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Are you trying to figure out the appraised value of your home? If you’ve just had an appraisal of your home, all you have to do is contact your lender. They will provide you with a copy of the appraisal. If you are looking at your appraisal report and you’d like to understand the appraised value of your home, here are the most important items to look for.
First, get the facts about your home. If you are not sure of the square footage of your home, go to your county or city website and find the basic information about your home. Most cities will have this on line. If your city does not have this basic information on the web, drive down to the court house and look it up. You absolutely have to know what the county says about your home before you can begin to look at the appraisal.
Once you find this basic information, look at the appraisal and be sure that your information that you collected from the county matched the appraisal. The square footage from the main level of your home will be listed on the grid page under GLA (gross living area). The basement square footage will be listed below this. Check the lot size and see if they are similar. Most appraisers will get this correct, but just check to be sure.
Now the big question, is did the appraiser use the correct comparable sales? How far out can an appraiser go to find comparable sales? These are the tough questions, but here are some basic guidelines. If you are located in the city, sales will be 1/2 mile to 1 mile from your home. The closer the comparable sale, the better it is. If not, the appraiser will have written in the appraisal why he had to go outside of the 1/2 mile. If you are in a suburban area, on the outskirts of town, but still close to the city, the comparable sales can be within one mile from the subject. If you are in the county, it will all depend. In some areas, all of your comparable sales will be within 3 to 5 miles. In other areas, your comparable sales will be 25 to 30 miles from each other. It all depends on what your home offers and what the appraiser thought were the best comparable sales.
Can an appraiser break these rules? Yes, they can, as long as they explain why they used the sales that they felt are the best sales that support the value of your home.
What about the cost approach to value? This approach to value is usually placed in the appraisal and is a completely separate value to the comparable sales approach used in the grid of the appraisal. The cost approach to value less depreciation is usually in line with the comparable sales approach. This means that the two number s will be close. Many times, it is a bit higher, as it is deemed to set the upper end of the price range, but this is not always the case. In some cases, the cost to build a home will be more than you can sell the home for and visa versa. Either way, the cost approach is given less emphasis in determining the value, in most cases, because it does not tell you what the market is willing to pay for homes in your area. And this is what the bank wants to know.
If you disagree with your home value, now what should you do? If you disagree with your appraised value of your home, ask a Realtor to pull some comparable sales to see if there are any other sales in the area that may have been used to determine the value of your home. Make sure the Realtor find closes sales within a year or newer. Or better yet, hire an appraiser to give you a second opinion of value. Or you can look on free websites to see if you can get a list of comparable sales and determine if they are any better than the ones the appraiser used. Better means more recent sales, look more like your home, have similar upgrades as your home, and offers similar square footage and/or amenities to your home. If you just shoot for a price, the appraiser will easily disregard the use of the sales, especially if they are not even similar to your home.
Can the appraised value of your home change? YES. I’ve appraised homes that I’ve value at $ 75,000 more six months prior, but I’ve also appraised homes that I appraised six months ago where the value has decreased by $ 40,000. It just depends on everything. It can also change from one appraiser to the next, as each appraiser will decide which comparable sales are the best homes to compare to the subject (your home). If your home conforms well (looks like the other homes in your area), you’ll find that the values will be pretty close. If your home is non-conforming (doesn’t look like any homes in the area), the values could be significantly different.
Would you like to learn more about buying, selling, and refinancing a home from a real estate appraiser. if so, go to http://increasehomevalue.org
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When dealing with guitars, antiques, or any collectible for that matter, there is a fine line between appraisal value and what the actual item is worth. The word “appraisal” gets thrown around quite a bit, and most of the time the “appraised” item in question has false perception tied to it.
There are many resources for appraisals, and seldom is there such a thing as a free appraisal. When you get an item appraised, you are being sold an appraisal. Appraisals are a service, and most of the time there is a fee for this service. That being said, this discussion in no way, shape, or form intends to discredit anyone who provides appraisal services.
There is a huge difference between appraisal value and actual market value. Let’s use a 1960 “burst” Les Paul for example, say in 60% condition. There are resources out there, appraisers and price guides, that would consider this particular guitar to be worth upwards of $ 100,000. In actuality, this guitar could sell for $ 60,000. That’s a 40% difference in price.
People can be misguided when it comes to appraisal price. If a luthier (or any appraiser) puts a $ 100,000 appraisal on said guitar, again, that’s appraisal price, not market value. The guitar, again in 60% condition, most likely will not sell for the appraisal price, and the price realized will most likely be considerably less.
Most people with these appraisals seem to think that their items are worth the same amount liquid as they are appraised. Unfortunately, the market value of these items is almost always less than the appraisal. Think of an appraisal as an insurance policy. Let’s say that you had a flood or a fire in your home and your guitar was destroyed or damaged beyond repair. If you were to provide a copy of that appraisal to your insurance company, that will most likely be the amount you will receive for replacement. When it comes to market value, these instruments simply don’t sell for your appraisal value.
You can even do some research yourself. Say you have an old Fender Telecaster in fair shape with a $ 15,000 appraisal. Next, try to find a comparable guitar with the same specs, and see if you can find one that actually sold for your appraisal price. The outcome? You won’t find one. There could always be a diamond in the rough that might sell for close to appraisal price, but most of the time it will sell for upwards of 40-50% less. That is the reality of appraisal value compared to market value.
Treasure Hunters Roadshow buys precious metals, coins and antiques at traveling shows held all across the US, Canada and Europe, allowing people to sell their collectibles for cash. For more information, visit http://www.treasurehuntersroadshow.com.
© Copyright – All Rights Reserved Worldwide, THR & Associates.
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On my last Alaska cruise as an art auctioneer, my friend Tamara, the ships’ Port Shopping Ambassador, related the following story: a passenger purchased an item of jewelry from a store in Skagway for around $ 10,000. The following day, the passenger got a serious case of buyers remorse, and sought to return the jewelry on the basis that the item was misrepresented and overpriced. To prove the item was overpriced, she took the item to a second jewelry shop to ask the shopkeeper to appraise the item. The appraisal offered was nowhere near what she paid for the item. In fact, the second shopkeeper told her that she had overpaid, and that she should return the item and then come back, because he could offer her a higher quality item at a lower price. I’m sure that this situation is as transparent to you as it was to me: the second shopkeeper was trying to make a sale at the expense of the first shopkeeper. That this sales tactic could work is rooted in the passengers ignorance of the difference between an appraisal and an opinion of value. The ignorance of this difference has cost clients of mine thousands of dollars in lost insurance claims and missed opportunities. Knowing the difference between an appraisal and an opinion of value will be to your advantage. An opinion of value is an opinion offered on the basis of experience and expertise. Such opinions may or may not be valid, depending on the qualifications and ethics of the person offering the opinion. The persons offering such opinions are not required to be independent, impartial or objective. They can, and often do, have conflicts of interest and hidden agendas. An opinion of value has no requirements for documentation or evidence. Those offering an opinion of value are not held to the same legal and ethical requirements as a certified appraiser. Let’s say that you took a Picasso etching to an art dealer who gave you his opinion of its value, called the opinion an appraisal, and then offered to buy the painting for the appraised price. The dealer would have offered you no evidence to back up his claim of value, and clearly had a conflict of interest. His opinion of value is worthless. The value offered in an appraisal, on the other hand, has been researched and evidence is offered to support the value claimed. Most often, evidence is offered in the form of comparable sales; that is, what items like yours have actually sold for recently in your market. In addition, a proper appraisal follows the format of the Uniform Standards of Professional Appraisal Practice (USPAP) which has been authorized by Congress as the source of appraisal standards and appraiser qualifications. USPAP is generally recognized by the courts and by the IRS. A USPAP-compliant appraisal clearly establishes the details of the appraisal, the appraiser, the intent of the report, assumptions, limiting conditions, and all evidence supporting the conclusion. When done, the appraiser must sign and certify the report. Such a report will stand up to legal and IRS scrutiny and the value offered can be trusted. Now that I’ve established what an appraisal is and isn’t, let me throw a wrench in the works. If you called five appraisers to appraise the same item, you may get five different appraised values for the item. How can that be? An appraiser must make certain assumptions and adjustments in arriving at the value of your item. Unless sales evidence can be found for an item exactly like yours, adjustments will have to be made to compensate for differences in age and condition. Making adjustments is more art than science, and ultimately depends on the skill and experience of the appraiser. Also, the intent of an appraisal will have a bearing on the value. Appraisals for insurance replacement, estate liquidation, fair market value and cash value will all yield different numbers. If the value of your tangible personal property is important for estate, tax, divorce, or other legal consideration, please don’t rely on an opinion of value to make your claim. Call a certified personal property appraiser.
Wayne Jordan is a Virginia licensed Auctioneer, Certified Personal Property Appraiser, and Accredited Business Broker. He specializes in the Valuation and Liquidation of Estate and Business assets. Learn more at his website http://www.waynejordanauctions.com or his blog http://www.wayne-jordan.blogspot.com
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The process of appraising your home involves developing a value from an opinion of an expert using a standard practice. When done accurately, it will help sell a property in an open market. It is important that we know how the valuation is derived.
In determining the important elements of the home appraisal, the following should be considered:
o Important actions to undertake to make the appraisal of the home better o Things to be done when the appraisal does not go well
Clarifying Issues About Appraisal Of Homes
The process of home appraisal revolves around the opinion of professional appraisers on the market value of a home based on a survey done using a standard method of practice. The appraisal is usually done by a professional at the instance of a bank for a mortgage loan that is being approved for a home buyer.
The determination of the value of the home considers several aspects of the home which include the overall condition of the home and the neighborhood, the price trends especially of similar real estate properties, and how fast the homes of the same type or class are selling in the open market. In general, the home appraisal is a report that incorporates a professional opinion on the value of a home for sale based on the physical aspects of the property and the prevailing conditions in the market.
The appraisal is not all about home inspection! The report is a comprehensive study of factors that make a sale of a particular home.
Things To Do When Faced With A Low Appraisal
The lender normally chooses the appraiser who will do the appraisal of the value of the home. However, the lender may also consider an appraiser chosen by the seller if the appraiser is well known. Sellers may opt to get their own appraisal, which will cost them $ 300-$ 500. The lender, however, may not recognize the appraisal report done by the one selected by the seller and will still rely on the report made by their preferred appraiser.
A mortgage loan may be jeopardized by an appraisal of the home for sale if it comes out lower than the asking price. The mortgage loan, in general, is only equivalent to 80% of the home value appraisal. It would be good if the seller is willing to adjust his price to reflect the result of the appraisal report. In some instances, the buyer and seller negotiates for a middle ground where both will be comfortable to proceed with the deal.
In instances where the buyer is willing to cover the amount corresponding to the difference between the appraised home value and the seller’s asking price, the lenders may not see this as a favorable arrangement. Such terms of negotiation between the buyer and the seller is seen by lenders as a negative equity and will have a negative effect on the approval of the loan.
Another option that is open to you is to dispute the results in the appraisal report. You can check on the prices of similar homes sold in the last six months and compare the results of your own survey with that of the appraisal report done for the lender. It would help greatly if you have a comparative market analysis or CMA even before the appraisal is done, as you can use this to defend your case when confronted with a low appraisal of home value. In such instances, the lender will usually ask another appraisal to be done by another appraiser.
The home appraisal is an important aspect in getting a mortgage and is usually the most confusing aspect of the entire process. The appraisal report is the expert’s opinion on the actual value of a property in the open market. It is important that you fully understand the elements that go into the process of appraising a home.
Learn more about the Anchorage Real Estate market or search Anchorage Homes For Sale on Ryan Tollefsen’s Alaska Real Estate web site.
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So you have scheduled the appointment with the Appraiser to have your home appraised. What should you do prior to the inspection, to maximize your value and possibly save some money as well?
In the days prior to the appraisal inspection, do a home inventory of all the repairs you made since you bought the home include (copies of receipts if you have them) or your contractors estimates/ canceled checks for major improvements. If you cannot find the paperwork list them down with your best estimate for each.
We recommend you bullet point all of these improvements and repairs on a piece of paper and present it to the appraiser when he/she first walks in. This will assure that the Appraiser does not miss anything and will speed up the appraisal inspection. Get copies of “signed off: permits or contractor estimates of work you have done. The Appraiser will require a copy of a signed off permit for any additions to be credited. Most often than not it does not appear on city records (not updated yet in many cases). If you do not have this at time of inspection the Appraisal can be made “subject to” permits thus causing delays. Or in many cases it is completed “as is” omitting the area altogether and giving this area value as additional storage area as an example.
If you have a copy of your previous appraisal make a copy of the report prior to the inspection and provide it to the Appraiser. If you have done improvements since the appraisal was done make sure you list them as suggested above.
Do not follow the Appraiser around pointing out every small detail of the home. This is not only distracting but many homeowners unwittingly point out various things they have done to the house that have little or no impact on the value. The Appraiser is not there to buy your home so you do not have to try to sell it to them.
The Appraiser can only address what presently exists and the condition your home is in at the time of inspection. They can address your property “as is” or “subject to” in determining the estimate of value. Do not tell the Appraiser of all of the things you plan/hope/wish to do to your home. In most cases it will have little to no impact in the final value estimate. Save your wish list for your contractor.
Do not worry about not having the laundry done. We are not there to judge your housekeeping; we are only looking at the physical characteristics and condition of your home. However remember that the appraiser will be taking interior photos for the lender a well as for the appraiser’s own liability.
Most Appraisers love dogs but place them out of the way or in a kennel or dog run when the appraiser is there.
Do not water down your yard and driveway right before the Appraiser inspects your home if you can. The appraiser finds him/herself walking through mud which could be tracked into your home and increasing the possibility of slipping or falling.
If you have security bars on your bedroom windows and they have no safety releases they must be removed. This is not only for your health and safety but the lender will require that they be removed. If they are not removed prior to the inspection, the appraiser must set up a re-inspection which will be an additional cost to you from the appraiser as well as your time and delay of your loan. You could lose a rate lock with the added delay.
Follow these simple suggestions and you will speed up the inspection process, assure nothing is missed, and maximize the appraiser’s ability to determine the estimate of market value of your home.
All Rights Reserved Pablo Santibanez Copyright © 2007-2008
Pablo Santibanez is the owner/founder of Fast Appraisals 4 U a Real Estate Appraisal firm with 2 offices located in the cities of Los Angeles and Stevenson Ranch. His firm is rated AA with the better business bureau.
Pablo began his career in real estate Appraisal in 1986. His practice takes him throughout several counties in Southern California. His unique and creative ways of marketing directly to the homeowner and real estate community make him an invaluable resource to those he works with. Pablo is a sought after advisor, with publications in various media outlets. His goal is to form strategic alliances with those companies and individuals who want to increase their professionalism and who have the consumer’s best interest ahead of their own. Pablo Santibanez lives in Santa Clarita with his wife and family. Ask questions you have relating to Appraisal or real estate in general at http://www.fastappraisals4u.com
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Home appraisals, although used in many instances, are designed to determine the true market value of the property in consideration. Market value is how much the property is worth according to what type of property it is, what condition it is in, and other properties similar to it in the immediate area.
The only problem with home appraisals is that they can often differ greatly among different appraisers, the professionals who actually appraise the property. This is because an appraisal is just an opinion, based on market data, as to what the property is worth. So, you may get a higher figure from one appraiser and a lower number from another appraiser.
This can give lenders room to determine the market value for a property. For example, a lender could have his personal appraiser appraise the property for considerably less, based on the market data that the appraiser chooses to use, in order to decrease the loan amount that the lender can provide a home buyer. In turn, if a home owner is selling a home, the appraisal can be determined at a higher value so the owner will get as much for the house as possible. This “opinion” may not always reflect an accurate or true market value.
For this reason, if you are refinancing a home, selling, or buying, it is a good idea to find an appraiser, not related to any of the interested parties, such as buyer, seller or lender, in order to find the true market value of the property. This appraiser will have no tendencies to determine the appraisal in anyone’s favor. It is an even better idea to get two or three appraisals if you feel it is really necessary. This is also a great tool to show whoever may have just a ridiculous appraisal that it could not be what they say it is. It can be great proof to strengthen your case for the property.
It is really important to have a true market value of the property so the owner can get what it is worth, the buyer can get it at the market price, and also get the proper amount loaned to him or her. When the property is appraised at true market value, there is room for some negotiation and everyone knows they are getting a fair price.
So how do you find an appraiser? Well, you could use the seller’s, the lender’s, or the broker’s appraisal, but like I mentioned earlier, I would find an independent appraiser. You can look in the yellow pages under appraisal, search the Internet, ask trusted people such as family, friends and co-workers, who may have a fair person in mind. This is really just a way to protect you from getting a bad deal.
You should call a few appraisers to get quotes on how much is charged for an appraisal. Find a few that are within in your price range and make appointments for a walk through, or meeting to discuss the property. The appraisers should explain the data they are going to use to determine the value of the home. They should evaluate the number of bedrooms, bathrooms, condition, upgrades, whether there is a pool or spa, and of course the land it is on itself. They should also check at least three similar properties that have recently sold in that immediate area within the last three months, that are comparable to the property in consideration.
A true market value appraisal can save you money and get the loan you deserve, so be sure to do it right! It is worth it, especially if you feel the people you are working with wish to work in their own favor. There are many honest people out there, but there are also many who will do anything to get some more money in their pocket, especially in the real estate market. There have been know to be dishonest lenders and appraisers, after all, with an appraisal being simply an opinion, get it confirmed! This can only work in your favor.
John R Blakefield is a mortgage and real estate specialist. For more information, articles, news, tools and valuable resources on home mortgages or investment loans, refinancing, debt solutions, visit this site: [http://www.scourtheweb.com/mortgage].
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Many people try to determine the values of their real estate by researching websites that value a home based on aggregate data collected through various means. While these online services can be quick and seem easy, computer generated reports can be grossly inaccurate. More often than not, computer data collected from outdated and often unreliable resources can cause issues when trying to determine a fair value of real estate in any specific market. These websites may be of some value in showing valuation trends, but can in no way replace the services of a local real estate appraiser.
Highly trained professional real estate appraisers, while more expensive, can effectively determine a home’s true value and also take into account variables a computer generated report can’t. Desirable factors such as a highly rated school system, economic development and surrounding neighborhoods can drastically affect a home’s value positively. Areas that are run down but in the midst of a gentrification process are unlikely to get a fair appraisal from a computer model, someone untrained or out of the area. Only a local appraiser will be familiar with rising or declining valuations and building trends in specified locations.
While obtaining a professional real estate appraiser to correctly determine a home’s value can be critical during a divorce, to value an estate, or to satisfy a lender requirement for a mortgage, choosing a reputable local appraiser that knows their market area can mean the difference between a good appraisal and a bad one. If an appraiser does not intimately know the market area they serve, many factors used to determine a home’s value can be left out of the process. Without knowledge of the current market area trends, property values given by an appraiser outside of their locale can be skewed.
As banks and other financial institutions are now dealing with untenable volumes of foreclosed homes, there is a growing trend among banks and other financial institutions to hire real estate brokers to complete BPOs (Broker Price Opinion), rather than pay appraisers for a home’s valuation. Although BPOs should be more accurate than computer generated reports in determining a property’s value, there is considerable controversy as to whether or not these real estate agents have adequate training to complete these reports effectively.
BPO services cost less than a uniform appraisal report; however, much like their computer generated counterparts, BPOs often omit crucial information. Many lenders do not even require an in-depth inspection or interior inspection of a home, for example. How can anyone hope for any type of realistic property valuation without an on-site inspection?
Appraisers are required to complete a stringent course of training through accredited educational facilities before they are licensed or certified. In some states, appraisers must also complete an apprenticeship under a more seasoned professional prior to being permitted to value property independently. A good appraiser will look at all aspects of the property, including square footage, room count, types of rooms, condition of property, lot size, neighborhood trends and comparable properties in the area that have sold recently, as well as comparable properties currently on the market.
Appraisals take longer than a BPO provided by a real estate broker or online computer generated reports. But, the report from appraisers is in depth and lengthy. All variables used to arrive at the valuation are in black and white.
Searching for a qualified appraiser in your area is relatively easy. Neighborhood banks and lenders are a great referral source. Searching an online directory or your local yellow pages can be another viable source as well when looking for a professional appraiser.
In the San Francisco Bay and Central Valley areas, contact Market Appraisal Group for accurate, reliable real estate valuation services with fast turnaround times.
Their state licensed and certified appraisers are experienced with valuing all types of properties for mortgage lending, estate planning, PMI removal, and divorce and settlement disputes. Powered by SEO 2.0 Services [http://seo-search-engine-optimization.netbiz.com/]
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The collapse of the economy began with a reality wind blowing against the sub-prime mortgage house of cards. We are all living with the results of over aggressive lending practices and over active government intervention. With all these friends who needs any enemies?
As the market realigns, property valuations have plummeted. Some of you may even be “upside down” on your mortgages. Do you buy? Do you sell? Do you ride out the tsunami? This series will go through all the major questions that we normally encounter in determining the value of a property. What are the drivers? What are the inhibitors? What you need to know to get the best value.
What is Property valuation/real estate appraisal?
The purpose of property valuation is to provide a current market based value for a property in comparison to others in its immediate vicinity. So an appraisal is time, location and geography specific. It is a comparative value – not an absolute. Second, real estate appraisals are broken into two broad categories – residential and commercial. For the purposes of these papers we will be discussing strictly residential appraisals. Residential real estate appraisers are licensed by their respective states and have different levels of license levels based on the value of loan for the property. They have to take classes and pass certification tests to gain and maintain their license status. They are also usually bounded by county because of the way Multiple Listing Services (MLS) keep and sell their records. So a good appraiser really knows their geography and what to look for.
Why does it cost so much?
Real estate appraisers are traditionally independent contractors/business people – no appraisals = no money. So while you are paying a relatively standard one time fee (e.g., $ 400) they have to make sure they get as many appraisals in as they can to make any profit at all. How’s that? After all they’ve got your $ 400. An appraiser has to cover all out of pocket expenses the same as any business person (education, health insurance, MLS fees, liability fees, business insurance, state fees – the list goes on). In addition a good appraiser may spend anywhere from 3 to 6 hours in preparation (looking for comparables, etc.), have a 45 minute or more drive time to location, 2 hours driving comparables and taking pictures and then another 1 -3 hours writing the report and then if the bank wants more info or kicks anything back they have to invest the time to answer questions, etc.
Also, is they get your request from another appraiser or from one of these new rip off government created middlemen called AMCs – they may have to split the fee. These are all just the costs of doing business. So when someone stops by for 30 to 60 minutes with a tape measure know that it’s the tip of the iceberg and you’re getting a good deal.
Do I own the appraisal?
The person/company who owns the appraisal is the person who commissioned it. So if you are looking for a house loan, your loan company “owns” the appraisal, not you because they are the commissioning agent. Even if you pay the appraiser, it makes no difference – you did not set up the transaction. Why is this important? The appraiser can’t legally give you a copy of “your” appraisal – it’s not yours. If you request an appraisal for loan purposes you may find that it’s not accepted by the bank because they didn’t request it or they don’t know the appraiser. Catch 22 – yes but not made by the appraiser so don’t shoot the messenger. There are all different kinds of appraisals (home, land, cost based, estate, chronological, etc.) and they are not interchangeable. Make sure if you are going to personally request an appraisal you know what it can be used for.
Why do I need a new Appraisal?
The market is so volatile that you may require a new appraisal every 6 -8 weeks for some lenders. In the last eight months housing values have dropped up to 40% in some areas. This means a $ 1 million house could be going for $ 600k now. This has made lenders very uneasy and they require more documentation and proof of values than before. Of course they were also the companies that caused the problem – Catch 22 for us. Refinancing has become more challenging as appraised values have gone done so rapidly that people who can manage the monthly payments are penalized because the “value” puts them underwater. For sellers it’s even more emotionally challenging as they believe their homes have a higher value in the market than they do and they get upset, the real estate agents get upset because the deal doesn’t close and the bank says the appraised value I what it is. The appraiser gets attacked for the state of the market instead the banks who created the issue.
How to determine value?
Value is determined the recent sales of similar homes within a given geographic radius. This means sales, not pending sales; people can ask what they want but banks want to know what other similar homes sold for – don’t let your real estate agent mislead you. While the process is meant to be precise, “similar” is a very ambiguous term. Are we talking square footage, age, upgrades, tile vs. marble, pool vs yard, the variables can seem limitless. This is why online value services are worthless and if you pay for them you are wasting your money. Only a live onsite inspection can see and assess value properly. Lenders understand this. Geographic area is also becoming looser. Neighborhoods can change in character so rapidly that the normal radius for a comparable is 3 miles. However because sales have been so slow, comparables are fewer and fewer. Because the lenders require 3 -5 or more valuations per property, sometimes more; appraisers are searching outside the 3 mile radius for comparables. Bottom line – if you’re looking to sell in the next 12 – 18 months don’t do any major upgrades because you probably won’t get your money back. Do what you need to please yourself and that’s it.
Who’s on First in this process?
People who refinance a lot or were thinking about a refinance in the last 6 months often ask this. Remember in the whole real estate process – the bank has the power – no one else. The recent complaints by others and finger pointing at appraised property values is really a distraction as banks with their loan programs and compensation systems drive everything. Because the banks lent money so freely and caused the crash – they have swung 1800 away and are now hoarding cash. To justify this approach they are squeezing loan agents and appraisers for more and more documentation of value. This is especially ironic for refis – people who are already good customers but just want to take advantage of some good rates. Bear in mind that banks don’t have customers they care about for repeat business – you are a commodity. This squeeze play in the name of “making sure it doesn’t happen again” drives up appraiser and loan agent costs which cannot be flowed through to the borrower. If you’re a banker – no big deal – you’re going to get a federal bailout bonus or in the government where it’s basically “who cares it’s not my money” – these things are not important because you don’t really care about impact. BUT if you’re working for a living on $ 400 increments with no guarantees of where your next job is coming from – it means a lot. The other guy in the process, who used to be a silent partner is the government. They have enacted new legislation to “clean up” the valuation process when it was never broken to begin with. This has backfired into more regulation raising lending costs in the process – some of which has been passed on to the borrower. It has also stifled loan creation – so while still have money they can’t borrow because of government pressures. The psychology is beyond the normal mind to fathom. Everybody that is supposed to help likes to put more rocks in our backpacks as we go up the hill and tells us it’s for our own good.
It also produces lower quality valuations and appraisals. Example, Fannie Mae requires that all appraisals they get be from “certified” appraisers. Because the government requires banks follow suit. Now the difference between a regular appraiser and a certified appraiser is a couple of classes and taking a test. So let’s say you been an appraiser for 20 years, done thousands of honest appraisals, have an MBA and have an excellent reputation – guess what – thanks to the government your out of business until you get spend hundred to thousands more and take a test. But it’s the same job you did before. So now you get a valuation done by someone with little practical experience who happened to take a test but gets the work. That’s the answer to some of the basic questions you want to know in this market. If you’re in the middle of this process and frustrated take it out at the ballot box but don’t kick your appraiser – they’re just the messenger.
Lori and Gordon Townsend have over 40 years business experience in building teams, coaching, sales, marketing and personal development. Lori has an MBA, left as VP of a real estate appraisal company and now runs a successful home based coaching business. Gordon has a Masters in Econ, left AT&T as a VP of Sales and Marketing, pounded on VC doors for funding and built and sold companies from scratch,. He now runs a successful home based coaching business. They both apply their hard won knowledge in helping people build their own futures. They are available for consultation, speaking engagements, and personal coaching! Email us today at Loriandgordon@gmail.com.
Article Source:
http://EzineArticles.com/?expert=Gordon_Townsend
Canton, MA (PRWEB) January 18, 2012
Today, EquipNet announced its acquisition of Present Value LLC–a worldwide Tampa Bay Appraisal and advisory company. Present Value co-founders, Christopher Kinzie and Christopher Spinelli, have joined the EquipNet team at the company headquarters in Canton, MA and Present Values international roster of certified Jill Davis Appraisers will now fall under the auspices of EquipNet.
Kinzie and Spinelli founded Present Value in 2006. They are both experienced Jill Davis Appraisers themselves, certified through the National Equipment & Business Builders Institute (NEBBI) as Certified Machinery & Equipment Appraisers (CMEA). Additionally, they are both certified through the Society of Business Analysts as Certified Senior Business Analysts (CSBA).
EquipNets President and Chief Executive Officer, Roger Gallo, is excited about the opportunities the merger presents. Acquiring Present Value allows EquipNet to provide our clients with a wider array of Tampa Bay Appraisal services, explains Gallo.
Not only will we have a global network of on-staff equipment Jill Davis Appraisers with expertise in all the industries we servepharmaceutical, biotech, chemical, and consumer processing and packaging, says Gallo, But in the future, well be able to offer our clients business valuations and real estate Tampa Bay Appraisal services, as well.
With the merger, Present Value Co-founder Kinzie has become EquipNets new Director of Appraisal Services. He calls the union a win-win for both companies customers and promises that the transition will be seamless. Present Values current clients will continue to receive the high level of Tampa Bay Appraisal and valuation services theyve always enjoyed, pledges Kinzie. And, by joining forces with EquipNet, they will now have access to additional services like recycling, reselling, and redeployment of their surplus assets.
Present Value Co-founder Spinelli will head up EquipNets Category Management Department, bringing his knowledge and understanding of Tampa Bay Appraisals to enhance EquipNets specification gathering and valuation methodology.
About EquipNet
EquipNet, Inc. is the worlds leading provider of proactive asset management services and solutions for large and small corporations in the pharmaceutical, biotech, chemical, and food, beverage, and personal care industries. EquipNets vision is to revolutionize the way companies manage their surplus assets. In addition to Tampa Bay Appraisal and valuation services, EquipNet provides its clients with the largest online MarketPlace for buying and selling pre-owned equipment; proprietary Asset Redeployment Management System software; environmental recycling of technology assets; auction services, and more. For more information, please visit: http://www.EquipNet.com.
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