appraisal

With No True Spring-Selling Market, What Will It Take To Sell Your Home in 2014?

Leave a comment

Housing Inventory Increase

Wow, it is hard to believe that we are almost half way through 2014 and summer is just about to get into full swing.  It is going to be interesting to see how we get through the real estate market this summer as we had no true spring selling season.  At our June Quarterly Meeting, I announced our numbers were up so far this year but we were expecting to have helped more families buy and sell homes up to this point.  Of course the weather got in the way early on and now that school is about to get out, people will be taking their vacations.  So it is important for sellers to be prepared for the upcoming situation.

Our inventory levels have continued to escalate since the warm weather broke in May.  It has resulted in us having more homes for sale than any time since October on 2011.  As we enter the summertime, the season generally slows down which will increase inventory as well, so sellers need to do all they can to attract the buyers that are out looking for a new home.  Sellers need to position their properties accordingly, as there is currently a 2 month supply of houses on the market.  The inside and the outside of the house needs to shine and show like a model home, as well as be priced to sell!  We are not able to “push” prices like we did earlier this year. What it takes to sell your house in 2014The sellers who overprice their properties, even just above what we recommend, sit on the market.  Additionally, we are having appraisal issues with properties in areas where there are no sales to support the higher values – even in multiple contract situations in arm’s length transactions.  The underwriting guidelines have made it tougher to get above market values approved, so please price your house accordingly.

If you have any questions, concerns, or would like to discuss your specific situation or the market, feel free to call me today (703) 652-5777.

Scott MacDonald

RE/MAX Gateway

What You Need To Know To Prepare For A Home Appraisal

2 Comments

We had a great training session with John Chapman and Nathalie Palmer from Omni Appraisal Services about the current market and how to help get your properties to appraise for the contract sales price or at least get better results.

Here are a few key items to take into consideration when know who you are working with on your appraisal:

There are two types of appraisers – licensed and certified. Licensed Appraisers can only do values up to $1,000,000. Certified Appraisers can do any property value. Additionally, Certified Appraisers must take a test and have a Bachelor’s degree. Only Certified Appraisers can appraise FHA loans.

Did you know there are two types of appraisers?
– Licensed and Certified
Do you know the difference?

  • Larger banks are paying less to appraisers through Appraisal Management Companies.  Almost all of the banks own them so they can make more money.  This is not always a “good thing”.  Often times you will get an appraiser with less experience or one that will rush through the process because they have to make up their income by doing more volume.  Appraisal companies are in place to put a buffer between the lender, Realtor and appraiser to perpetuate a more “arm’s length” transaction.  What has resulted is that the banks are using this as a profit center and not always employing best in class appraisers.
  • Check with the appraiser’s competency and local knowledge.  Ask where they are located and if they are familiar with your property/area.  Additionally, ask how long have they been appraising homes?  Lastly, check and see if they work from home or office?   Many small owner operators work from home and as a result, don’t get exposures to other appraisers.  This lack of networking, idea sharing and updates on the market can hurt appraisals.
  • Education for appraisers is getting tougher.  There is an apprenticeship for 2 years now.
  • There are two types of appraisers – licensed and certified.  Licensed Appraisers can only do values up to $1,000,000.  Certified Appraisers can do any property value.  Additionally, Certified Appraisers must take a test and have a Bachelor’s degree.  Lastly, only Certified Appraisers can appraise FHA loans.

What you need to be prepared for your appraisal:

  • Always bring your own comparable sales – make sure they are good comps so you can build creditability.  Even bring low sales and let them know what the issues were that resulted in their low sale – pet odors, back to power lines, short sale, foreclosure, etc.
  • If at all possible, provide plat/floor plan – proper measuring is critical because if its 100 square feet off the true square footage you will have issues
  • Bulls eye approach – first look in subdivision, then do a radius search of 1 mile, 2 miles, etc. to find the right comparable properties.
  • Use a couple of higher sales, couple of smaller home, the radius approach to finding properties and a couple within the timeframe of settling within 3 months or less
  • You now need to have 5 to 6 comps
  • Provide 1-2 under contract comps as part of your presentation
  • Find FSBO too!  They can help your cause
  • Pass on any and all information you know about your property – list all recent improvements and their cost/value to help support your price.
  • Provide details on other offers if you had multiple offers
  • Provide additional pricing details like the Home Pricing Wizard, RBIntel statistics, and articles relating to escalating prices.

Steps to overcome low appraisal

  • Get a “good” conversation going, kill them with kindness
  • Provide new info that the appraiser might not be aware of when you met initially at the property
  • Be there when the appraiser wants to meet at the property
  • Use their language
    • Beneficial
    • Neutral
    • Adverse

Appraisers need to be concerned with the following items:

  • Safety –  the house needs to be safe, easy to explain
  • Soundness – the house needs to have structural integrity including but not limited to the roof and foundation
  • Security – the house needs to have locks on windows and doors

Integral issues for appraising

  • You have to know the condition and the subsequent ratings of the properties condition.  The rating scale goes from C1-C6.  One is the best and 6 is the worst.  Speak with the appraiser in terms of the condition to get more value for your clients
  • You also have to know the quality of the construction in order to help get more value.  Was the home custom built or was it a cookie-cutter built in the late 70’s with 7.5 foot ceilings?  These rankings range from Q1-Q6

As you see, it is extremely important for you to be a professional agent, do you job thoroughly for you clients and get the results that everyone is looking for from the appraisal process.  Get it?  Got it?  Good!

Now, go sell something!

Scott MacDonald

RE/MAX Gateway, LLC

 

Platinum Group: Hot Topics in the Northern Virginia Real Estate Market

Leave a comment

In a recent Platinum Group meeting we discussed many hot topics in the real estate market today.  They included the appraisal issues we are encountering that I discussed in my last blog, new home sales, the rental market and of course, low supply and high demand.

New home prices are rocketing up, incentives are going away, one builder sold 13 houses last weekend in Prince William County and took closing costs down to just $5,000 when they were offering more at the beginning of the weekend.  Nationally, new home sales dropped but not in Northern Virginia.

Platinum Group Hot Topics FEB 2013 scottymacsblog

Lack of resale inventory is leading buyers to new homes.  When buyers go to new homes, their prices increase.  Be careful as a lot of builders don’t have appraisal contingencies in their contracts.  Ask what happens if house doesn’t appraise.

The rental market continues to be on fire.  We have a 1.7 month supply of rentals available in Northern Virginia.  Prices have stabilized and move quickly when they are in good shape.  Additionally, in a recent article, it was estimated there will be another 6.6 million renters in the market.  It makes now a good time to work with investors, understand the rental process or even start a property management company.

One other topic we discussed was the lack of inventory of resale properties on the market.  It has been mentioned that we are at an 11 year low in terms of available properties.  When something is desirable, we have seen as many as 14 contracts on one home.  It is time to structure offers for our buyers so they can win in multiple contract situations.

 

To learn more about the market or our networking group, feel free to reach out to me.  scottmacdonald@remax.net

Now, go sell something!

Success as Appraisal Concerns Rise In Northern Virginia Real Estate

2 Comments

Uh – oh some appraisals are low!
As we enter the spring market I have growing concerns over appraisals here in Northern Virginia. As we come out of the “slower” winter months, appraisers have fewer homes to choose from to help catch them up with the market today. We are seeing 20-30 people regularly at open houses which is rare for this time of year. There are only 3,081 houses for sale in all of Northern Virginia – a true supply issue for the number of buyers in the marketplace. As a result, it is rare not to see multiple offers on houses listed today. This is not an artificial “run up” of housing prices and we are not stretching prices as we are still below the highs of the housing bubble in many areas. The law of supply and demand should dictate property values in my opinion.
Here are examples of the last few appraisals we have come across. Two single family homes in the same neighborhood in Fairfax both recently came in low – one was sold at $850,000 and appraised for $847,000 – really? The other one sold at $877,000 and appraised for $811,000. How can these numbers be so far off from each other and where is the real estateAppraisal Concerns scottymacsblog market headed today? One of our agents listed a town house in Countryside for $320,000. They received 3 contracts in the first weekend – an obvious issue of supply and demand. Well, it sold for $326,500 and appraised for $300,000. The appraiser used a short sale that had closed several months prior to this sale at $260,000 as a comparable. Short sales are less than 8% of the market plus if it closed several months prior to this sale, because of the short sale process, the contract was written several months prior to closing – how is this truly a reflection of the market today? We also had an offer come in on a town house in Centreville recently which sold for $450,000 and appraised at $435,000. The appraiser used a new town house in a community down the street that settled in July of 2012. Again, as it was new build, the contract was written a few, if not several months prior to the settlement – is this a true indication of market value today? What’s worse is there was a closing in the same neighborhood which was a higher value that settled in December that was not used to support the price of our town house. Lastly, we had a condo in Sterling that came in low by $8,000. The sales price was $175,000 and it appraised for $167,000. I think you can understand our issue.
What can be done? First, provide information to your sellers and buyers early. Set the expectation that the property may not appraise for the sales price and discuss the potential options with them so they understand what the next steps would be for them. Let them know that the appraisers may have difficulty finding suitable comparable sales – this is where you must be diligent and provide solid comparable sales to the appraiser. If you are dealing with an FHA appraisal and the sellers of comparable properties paid closing costs for their buyers, let them know the appraiser will take that amount off the top of the sales price which could bring down your value. As there are many multiple offer situations, some buyer’s agents are putting in high offers to get an approved contract knowing they won’t get the needed appraised amount – let your sellers know this is the case and the highest price is not always the best offer. If you are selling a new home, most builder contracts do not have appraisal contingencies in them for their protection, not the buyers. As prices of new homes are escalating this becomes a concern for buyers today. Remind them that an appraisal is a snap shot in time based upon historical data that is already behind our escalating market.
In addition to providing information to your sellers and buyers, provide extensive details to the appraiser. Plus, don’t just provide them with information, meet them and discuss what you and they are seeing in the market – build rapport by sharing your stories and listening to theirs. Share with them your comparable sales and why they should be considered. Explain the Home Pricing Wizard to them in detail and how it helped you determine the market value. Provide them with copies of the competing offers so they can see it is a desirable property. Share with them your feedback from Showing Suite that shows other agents that visited the property how they felt the property was priced at market value – or below. Bring market data from RBIntel that shows the market is increasing in value, as well as, articles that point to this fact. You must be diligent in your representation of our clients and do all you can to get the houses to appraise.
The good news is not all properties are appraising low, but there are enough that are, so this is why you need to pay attention and educate our clients on what is happening in the market. This separates you from other agents and makes you a professional. Get it? Got it? Good!
Now, go sell something!

How do we determine the price?

Leave a comment

I recently posted a blog on Tips for Securing an Accurate Appraisal.  It brought to mind the different aspects of pricing in real estate.  It is one of the most important aspects when buying or selling a home in any market.  Keep in mind, in Northern Virginia, there are always people willing to buy and sell in any environment.  It is critical to analyze various aspects that determine the true market value but ultimate determination is what a buyer is willing to pay and at a price the seller is willing to sell.  Listed below are a few points variations of value.

 

-Appraised value:  this is the most subjective piece of the puzzle today with the implementation of the Home Valuation Code of Conduct.  It has taken what was once and almost a given to a tougher process to achieve “market value”.  As a “value add” part of listing process to our listing clients to help them achieve our sales price, we always meet the appraisers at the property to help support the value or sales price.  We include floor plans, surveys, comparable sales, market data and trends as well as statistics on the area that will help in the process of determining the property’s value. 

 

-Market Value – the truest form of value – what the buyer is willing to pay and the seller is willing to sell the property for under current market conditions.  Market value is determined by a particular purchaser’s and seller’s research of the market, market trends and data available at the time of the offering.  This is the value we hope to attain through the appraisal process once a contract is ratified.

 

-Tax Value – what the local governmental agency sets as their valuation for tax generation purposes.  These values are determined by market conditions and perceived value based upon an assessor’s opinion of what is happening in the marketplace and to raise funds in the appropriate jurisdiction.  These valuation occur on a regular basis from once a year to once every 5 years depending on the area.

 

-Perceived Value – This is the value a seller has in mind for selling their property for – it may be low, but often times it is high.  This value can come from past sales, perceived values of improvements made to the property or lack of improvements made that are necessary to achieve the value they perceive.  Additionally, this opinion can come from family, friends or neighbors and what they believe the seller could obtain in a sale.  On the flip side, it can be a purchase’s perceived value and their attempt to “steal” a house.  This value typically holds the least weight.  This value is also the hardest to overcome for a Realtor in many cases.

 

-Agent/Realtor Value – this value comes from market knowledge, market trends, analysis of demand in the price point, and in depth analysis of square footage prices, tax assessed value to net sales price ratios, and sales prices of comparable properties that have settled within the previous 90 days.  An experienced Realtor can be your most valuable asset in determining the right value for the house being considered.  If you have the right Realtor on your team – they are an invaluable asset. 

 

Hire a Realtor today!  Get it?  Got it?  Good!  Now, call us today 703-652-5777.

Top 5 Tips for Securing an Accurate Appraisal

Leave a comment

When it comes to buying or selling property, a successful outcome often hinges
upon an accurate appraisal. Unfortunately, due to unrest in the appraisal
industry sparked by government guidelines imposed by the Home Valuation Code of
Conduct (HVCC), securing an accurate appraisal can be hard to come by these
days. Colleagues have shared many a horror story about an appraisal gone wrong
and a client that’s left to pay the price.

As a member of the Top 5 in Real Estate Network®, however, I have learned that
there are steps you can take to help ensure an appraisal accurately reflects
the home’s value. Consider the following advice:

1. Keep it local. Inaccurate
appraisals are often the result of the current practice of using an appraiser
who is unfamiliar with your community…sometimes, they’re even coming from
another state! Talk to your agent and/or lender and insist that the appraiser
involved is local and, therefore, understands home values in your neighborhood.

2. Utilize comps.
Make sure your lender and appraiser are accurately leveraging comps (comparable
market sales) of local properties sold within the last six months to help
appraise your home. Your real estate agent can help in this area.

3. Put your best foot
forward. If you are selling your home, make sure it’s in the
best possible shape before the appraiser visit. Invest in any necessary repairs
and effective cosmetic changes. Consider how your home stacks up against other
homes in your neighborhood and let that be your guide.

4. Review carefully. Review
the appraisal thoroughly to make sure all the basic facts are correct: square
footage, features of the home, number of rooms, etc. If you find mistakes, call
the appraiser and ask to have them corrected. If the appraiser refuses to make
the corrections, file a complaint with your state’s real estate appraisal
board.

5. Don’t settle. You
are not bound to accept the appraisal results. Both buyers and sellers can
request a new appraisal. There is no guarantee that the bank will accept the
new appraisal, but it can be used to challenge the first appraisal.

An honest, accurate appraisal can make all the difference in your real estate
transaction. Follow the above steps and please e-mail
me for more details. I encourage you to forward this important information
to your social network, as well.