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Are you worried that the home you’re buying with screw in fuses may not meet FHA/HUD guidelines?

May 20th, 2013 by Tom Horn · Appraisal, Appraisal Tips, FAQ's, Realtor Tips

PinExt Are you worried that the home youre buying with screw in fuses may not meet FHA/HUD guidelines?

I was looking at a home this week, for an FHA loan, that had screw in fuses. Have you ever seen these? They use to be common years ago, however at some point they were replaced with circuit breakers. I have been asked by homeowners and real estate agents if these fuses meet HUD’s minimum property requirements (M.P.R.), so I thought I would share the answer with you.

The short answer to the question is “yes”. Screw in fuses are acceptable for homes being financed with an FHA loan, fuse box 300x225 Are you worried that the home youre buying with screw in fuses may not meet FHA/HUD guidelines?however there are some conditions. First of all the fuses must meet local building codes. If they are acceptable then the appraiser must  make sure that there are no frayed or exposed wires, which could cause and electrical fire. Some of the older screw in fuses are limited to 60 amps but if this is adequate for the size of the home and it’s requirements then it should pass FHA guidelines.

Appraisers are not electricians and they are not qualified to make the final decision regarding the adequacy of electrical service for homes that have had upgrades over the years but have not had the electrical system updated. It may be necessary to upgrade the electrical service to meet code. When this is the case appraisers may call for an inspection by an electrician, who will then report on the adequacy and may make recommendations. If this occurs the the loan underwriter will most likely make the final decision if any repairs or upgrades need to be made. I hope this answers any questions you may have about the older screw in fuses and whether they pass FHA/HUD appraisal requirements. If you have any other questions let me know and I would do my best to answer them for you.

If you have any real estate appraisal related questions you can call me at 205.243.9304, email me, or connect with me on Facebook., Twitter, or Youtube.

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5 key statistics and what they mean to the Birmingham, Alabama real estate market

April 29th, 2013 by Tom Horn · Appraisal, Market Trends

PinExt 5 key statistics and what they mean to the Birmingham, Alabama real estate market

Everybody keeps talking about how good the Birmingham, Alabama real estate market is compared to past years, so I thought I would take a closer look. There are certain key statistics that need to be performing well for the market to be healthy. Lets take a look at some charts to see if we can understand what’s happening. Just so you will know, I have included charts published by the Birmingham Multiple Listing Service as they have compiled some very helpful information.

Number of Homes Sold

number of homes sold 5 key statistics and what they mean to the Birmingham, Alabama real estate marketThe number of homes sold is a good statistic to look at if you want to gauge the confidence of the market. In the past we have seen sales volume be down because buyers did not feel comfortable purchasing a home for various reasons including uncertainty in their jobs. An increase in sales volume indicates buyers are now more confident and they feel the economy is doing better. Up through March of 2013 the number of homes sold has increased by almost 7.5% compared to the same period in 2012 and by over 9% since 2010. A softening stance on loaning money could also be making more funds available for buyers.

Median Sales Price

median sales price 5 key statistics and what they mean to the Birmingham, Alabama real estate marketFor January through March of 2013 the median sales price of homes in the Birmingham, Alabama market has surpassed the first 3 months of every year since 2010. The total of median sales prices for January through March of 2013 totaled $436,900, which exceeds the next highest total by almost 7.5%. The median sales price is a better indicator than the average price because it is less effected by the high and low factors that may have occurred. Occasionally an outlier sale will occur for various reasons, it could be a very low foreclosure sale or maybe even a home that sold for a higher than normal amount. The median sold price statistic will not be effected by these types of sales.

Total Number Of Foreclosure Sales

foreclosure sales 5 key statistics and what they mean to the Birmingham, Alabama real estate marketThroughout 2012 and the first quarter of 2013 I have noticed a decrease in the total number foreclosure sales. This is important for two reasons. The first of which is that the lower number of foreclosure sales you have the less likely they are to bring the median price down. As you might expect, foreclosure’s sell for a significantly lower amount than traditional arms length sales do. Like the other statistics mentioned above, the first 3 months of 2013 have seen a decrease in the total number of foreclosure sales. The second reason is that with less competition from foreclosures that are for sale, the more non-foreclosures will sell which should bring up the median price. This statistic is also tied directly to the next one I want to discuss.

Percentage Of Foreclosure Sales

percent of foreclosure sales 5 key statistics and what they mean to the Birmingham, Alabama real estate marketIn February of 2011 foreclosures made up approximately 43% of total sales, which is the highest amount for the first 3 months of the year back to 2010. March of 2013 marks the lowest percentage of foreclosures since January of 2010, at 27%. As I mentioned previously, the less foreclosures you have in the market the less effect they will have on the median sales price. I think the banks have finally discovered that flooding the market with foreclosures was not a good idea. It appears they are slowly releasing them into the market, which has helped to start a recovery.

Active Listings

active listing count 5 key statistics and what they mean to the Birmingham, Alabama real estate marketOne of the biggest things that is driving a current spike in sales prices in many areas is the decrease in active listings. It all goes back to the basic principles of supply and demand. The less there is of a product, the more the products price will rise. The amount of active listings is at its lowest since 2007, with 7,506 homes currently listed according to Birmingham MLS records. This is up slightly from January’s number of 6,962, however an increase in inventory from January to March is not uncommon. The fact that there are less foreclosures has also resulted in the lower inventory.

As you can see by looking at these 5 key statistics, the Birmingham area real estate market should see some positive growth this year if the release of foreclosures is controlled and active listing inventory does not increase significantly. Can you think of any other statistics that we should look at to measure the health of our local market? Leave me a message I would be interested in hearing from you.

If you have any real estate appraisal related questions you can call me at 205.243.9304, email me, or connect with me on Facebook., Twitter, or Youtube.

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Here’s a home seller checklist to help your house appraise for the highest amount possible

April 14th, 2013 by Tom Horn · Appraisal

PinExt Heres a home seller checklist to help your house appraise for the highest amount possible

836448.clipboard Heres a home seller checklist to help your house appraise for the highest amount possibleWith the spring and summer season approaching many homeowners will be listing their house for sale. This is the time of year that people like to move. It is easier to move during the summer months and families can get moved in before school starts.

Real estate appraiser’s look at various things during their visit to your home. If you plan ahead you can make sure your home is in the best possible condition so that you get the highest value possible. While a little clutter here and there will not affect the appraised value it does not hurt to have the home in its best possible condition and presented nicely. By spending a little time on cosmetic details and minor repairs a good impression can be made.

Appraisers are human and they respond to a clean and orderly home the same as buyers do. During the inspection we look at materials of construction and condition of the improvements. Take a look at the checklist I have included for you to print out and have when you are getting your home ready to sell.

Home Seller Checklist by birminghamappraiser

As you can see we look at both the exterior and the interior of the house and assess its condition. This helps us to estimate an effective age in order to choose the best comparables. Because a minimum of three sales are used in an appraisal a range of value is developed. This is where the good condition and upkeep of the home can pay off. Within the range of value the appraiser can reconcile a final value estimate based on the subject’s condition and appeal as well as the marketability of the area.

If the home is in good condition and shows well, it is possible that the upper end of the range could be justified and supported. On the other hand, if the home has not been well kept, has necessary repairs, and does not show well, the lower end of the range may be reconciled. I hope this list helps you to get the highest value possible for your home. Let me know if you have any questions.

If you have any real estate appraisal related questions you can call me at 205.243.9304, email me, or connect with me on Facebook., Twitter, or Youtube.

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What is the most popular neighborhood in Alabaster for the first quarter of 2013?

April 10th, 2013 by Tom Horn · Appraisal, Market Trends

PinExt What is the most popular neighborhood in Alabaster for the first quarter of 2013?

alabaster alabama real estate What is the most popular neighborhood in Alabaster for the first quarter of 2013?

The Birmingham, Alabama Multiple Listing Service has recorded a total of 87 single family residential sales for the city of Alabaster in the first quarter of 2013. I thought it would be interesting to take a look at what neighborhood was most popular among buyers by seeing which one had the most sales.

Several neighborhoods had 3 and 4 sales but the one which had the most was the Park Forest subdivision, which had a total of 6 sales. Park Forest is located off of Highway 119 on the south side of Alabaster. Homes within the entire Park Forest subdivision range in age from 8 to 32 years. The range in sales price for the recent home sales is from $65,000 to $191,000, with an average price of $145,505 and a median price of $162,950. The home with the low price of $65,000 was a foreclosure and brought the average down.

In contrast to this  year, Park Forest had only 2 sales during the same period in 2012. Those homes sold for $105,000 andquestion What is the most popular neighborhood in Alabaster for the first quarter of 2013? $155,000.  The popular subdivision with the most sales during the first period in 2012 was Silver Creek, which is also located in the same area as Park Forest, off of Hwy. 119.

I expect to see sales volume continue to rise this year as more people make the decision to buy. Property values are still somewhat slow in rebounding, however the decreased supply should help reverse this trend. Are you seeing any positive signs in your neighborhood?

If you have any real estate appraisal related questions you can call me at 205.243.9304, email me, or connect with me on Facebook., Twitter, or Youtube.

 

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What you should know about FHA guidelines for attics if you want to sell your home

March 27th, 2013 by Tom Horn · Appraisal, Appraisal Tips, FAQ's, FSBO Tips, Realtor Tips

PinExt What you should know about FHA guidelines for attics if you want to sell your home

I received an email this week asking what the FHA guidelines for attics was from a person who wanted to sell their home. They wanted to make sure it met these guidelines just in case the buyer used an FHA loan.  So I thought I would share my answer with you in case you might be wondering the same thing.

The HUD Handbook 4150.2 states the following in section 3-6A(9):

The appraiser must enter the attic and observe the interior roof structure and attic for evidence of leaks, water damage, structural problems, previous fire damage, FRT sheathing, exposed and frayed wiring, deficient materials, deficient insulation and adequate ventilation by vent, fan or window. The attic must be entered, at a minimum, by head and shoulders, whether access is by pull-down stairway or scuttle. Size of scuttle and accessibility of the attic dictate the level of entry. If unable to visually evaluate the improvements in their entirety, the appraiser must contact the lender and reschedule a time when a complete visual inspection can be performed. The appraiser is not required to disturb insulation, move personal items, furniture, equipment, plant life, soil, snow, ice or debris that obstructs access or visibility.

So as you can see that while the inspection is only a “heads and shoulder” one, the level of observation is still pretty extensive. If there is no attic access this must be reported and the underwriter will most likely make the loan subject to an access door being installed so the appraiser can report their findings. The only time one would not be required is when the roof is flat. The goal of the inspection is to determine if the attic meets the “Three S’s” which I wrote about in my HUD MPR post. Take a look at the video below to see a recent attic I looked at during an appraisal inspection.


Are there any features of your attic that you are concerned may not meet HUD/FHA guidelines? If you have any questions let me know by connecting with me at any of the social media accounts listed below.

If you have any real estate appraisal related questions you can call me at 205.243.9304, email me, or connect with me on Facebook., Twitter, or Youtube.

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How much does an appraisal cost?

March 13th, 2013 by Tom Horn · Appraisal

PinExt How much does an appraisal cost?

house dollar How much does an appraisal cost?I get asked a lot about the cost of an appraisal. More and more homeowners these days are seriously considering getting an appraisal on their home to help them price it correctly to sell. There appears to be a change in the mind set of many homeowners from several years ago when the market was appreciating at such a rapid rate. Many sellers would price their home at a very high level due to high demand and most of the time the home would sell fairly quickly, but in today’s market this is not the case. Competition for buyers is stronger and it is very important to list your home for the correct amount to move it as quickly as possible and to help reduce the likelihood of it not appraising for what it needs to for the mortgage.

Because many homeowners want to have an appraisal done they are curious as to how much an appraisal costs. There are various factors that go in to quoting an appraisal assignment so I thought I would share with you what we look at when deciding on the fee. I would like to add that in addition to property specific items there are other considerations that determine the fee that you might pay if you were going through a lender who uses an Appraisal Management Company (AMC). Let’s first look at property specific information.

Location- The location of the property can effect the difficulty of the assignment. Rural properties typically require more work because the availability of sales is different than a suburban home in a subdivision where sales occur more frequently. Obtaining sales information call also be more challenging if private sales make up a large part of the market. Sales that occur through a local multiple listing office are easier to track down than private sales because they are easier to verify. The remote location of a property can also result in higher job expenses which can drive up the fee.

Size- Large, custom built homes take more time to measure and inspect. Depending on the size of the house, and other property improvements, an inspection can last anywhere from 30 minutes to several hours. A one level 1,200 square foot home on a subdivision size lot will require less work than a large 5,000 square foot custom built house on 10 acres with a guest house or barn.

Complexity- The complexity of a job assignment can sometimes be tied to the size of the home but it also may be the result of the home being unique compared to typical homes. Some examples of this include lakefront homes, homes that are special purpose (horse farm,etc), homes that are built with custom materials or even homes that are effected by their location to positive and negative influences. If a home is located next to a busy interstate this can make the job more difficult because the appraiser will have to find sales of homes with similar features because of the possible influence on value.

Type of Property- The appraisal fees for different types of properties can vary. This is usually related to the complexity of the assignment. Property types include the following: single family residences, manufactured homes, modular homes, and multi-family residences (duplexes,etc.). Depending on the real estate market, data may be limited and this could result in additional time and effort.

Non Property Specific Reasons For a Higher Appraisal Fee- As I mentioned previously there is another reason that a homeowner might pay a higher fee for an appraisal and that would be whenever an Appraisal Management Company (AMC) is involved. This would only occur when they are getting a loan from a bank or mortgage company. Several years ago government legislation required a third party to get involved so that communication between the loan officer and the appraiser would be reduced. This was supposed to reduce potential pressure on the appraiser by lenders. While it was possible for non commission employees within the bank or mortgage company to perform this task, many companies outsourced this job to AMC’s, which ended up costing the consumer more money. The only reason I include this information here is so the homeowner will better understand the difference between what their loan documents say they actually paid for the appraisal and what the appraiser says he got paid. Most AMC’s will add their fee on top of what the appraiser gets and increase the cost to the homeowner, which can result in the “appraisal” fee increasing by several hundred dollars.

As I said, there are many factors that go in to quoting an appraisal, so if you would like a specific quote on your own property please give me a call. I would be glad to speak with you about it and answer any questions you have.

If you have any real estate appraisal related questions you can call me at 205.243.9304, email me, or connect with me on Facebook., Twitter, or Youtube.

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Two Exciting Trends Suggests A Stronger 2013 For The Alabaster, Alabama Real Estate Market

February 26th, 2013 by Tom Horn · Appraisal

PinExt Two Exciting Trends Suggests A Stronger 2013 For The Alabaster, Alabama Real Estate Market

While working on some market trends during a recent appraisal assignment I ran across some data that suggests the Alabaster, Alabama real estate market may be on its way back up.

Over the last several years the existing inventory of houses for sale has been a big problem in the area. It reached higher levels than normal because of several factors, including an oversupply of foreclosure and short sale homes and decreased buyer demand. Buyers were hesitant to enter the market because of decreased job security and the tightened credit guidelines imposed by lenders. It appears these factors may have shifted in 2012. I believe banks started to realize that flooding the market with distressed properties was not helping matters. The increase in inventory of low priced houses resulted in declining markets in many areas.

In 2012 we appeared to have a reversed these trends. Take a look at the graph below to see what I’m talking about.

alabaster alabama sales and inventory trend Two Exciting Trends Suggests A Stronger 2013 For The Alabaster, Alabama Real Estate Market

During 2012 existing housing inventory reached levels we have not seen since before 2005. The first and second quarters were the lowest of all periods from 2005 to 2012. This, combined with low interest rates and pent up buyer demand, has resulted in what appears to be an upward shift in the median sold price. If you look at the median sales price trend line in the second half of the year you will see a slight increase.

In 2012 the months of inventory ranged from 3.92 months to 6.69, which is more reflective of a market that is “in balance”. It has decreased from previous years as you can see in this graph.Months of Housing Inventory Alabaster AL Two Exciting Trends Suggests A Stronger 2013 For The Alabaster, Alabama Real Estate Market
If these trends continue I believe that 2013 could be a better year than 2012, and I believe property values, which have been slower to respond, could start showing increases. What do you think of the Alabaster market? How is your neighborhood?

If you have any real estate appraisal related questions you can call me at 205.243.9304, email me, or connect with me on Facebook., Twitter, or Youtube.

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Why Do I Need An Appraisal?

February 21st, 2013 by Tom Horn · Appraisal, FAQ's

PinExt Why Do I Need An Appraisal?

This is a good question that you may have asked yourself at some point in time, especially if you were buying a home. question Why Do I Need An Appraisal?Most people are aware of the traditional areas where you would need an appraisal such as those required when you are buying, refinancing, or building a home. These are the areas that the majority of people are exposed to. Today I want to focus on those areas that may not be so well known. Anytime you need to know what your home is worth, you need an appraisal. I have touched on some of these areas in previous posts but will explain them in more detail here. The first area is:

Marketing Appraisals:

  • These appraisals are typically done for FSBO sellers wanting to price their home to be competitive with what other homes are selling for.
  • In addition they can be done for people that are having a hard time selling their home.
  • One of the top reasons a home does not sell is that it is over priced; therefore an appraisal can be performed to provide support for the asking price.
  • On the other end of the spectrum a home that sells very quickly was probably priced too low.

Tax Appeal Appraisals:

  • County Property Assessor sets assessment based on what other properties in the area have sold for.
  • If the county has assessed your property using sales from last year and have not updated their records to reflect current sales prices your home may be assessed too high.
  • You can get with the respective county offices to find out their exact procedure for appealing the value as well as the deadlines.
  • An appraisal can help support your argument with the county if it shows that your home is worth less than what the county has it assessed at, which can help lower your property taxes.

Bankruptcy Appraisals:

  • Both types of bankruptcy, chapter 7 and chapter 13, require the owner to provide proof of the value of their assets.
  • This includes a value of their biggest asset, their home.
  • There are various ways to get a value. These include a free online service (Zillo, etc), AVM’s, BPO, CMA, drive by appraisal, or full interior/exterior appraisal (most credible of the ones given).
  • It is very important that the source of value be credible. This credibility begins with the source of the appraisal (who did it), so the experience and reputation of the appraiser is important as well as the certification level of the appraiser.

Estate Planning:

  • This type of appraisal is typically performed to determine the value of assets for the following reasons:
  • Estate Tax-equitable distribution of assets; value for IRS
  • Gift Tax-Used to determine the taxes to be paid on a gift of real estate
  • Trusts-Property transfers to charitable trust require appraisals for IRS
  • Financial Planning
  • Guardianship/Conservatorship

Foreclosure Appraisals:

  • These types of appraisals are typically required by lenders when mortgage payments become 90 to 120 days past due.
  • It is performed to give the lender an idea of the current market value of the home. By knowing the value they are able to make more informed decisions regarding the equity in a home or the charge off liability.
  • After the bank takes back the property it becomes an REO (real estate owned) property, completely owned by the bank.
  • If it does no sell in a certain time period the bank usually gets another appraisal to determine if market conditions have changed along with the value.

PMI Reduction:

  •  Homeowners have the option of providing an appraisal to their mortgage servicer to determine if their mortgage loan meets the loan to value guidelines.
  • This is typically 80%, however this should be verified with the servicer as well their company specific guidelines for dropping pmi.

Please let me know if you have any questions about these types of appraisals, I would be glad to talk with you about it.

If you have any real estate appraisal related questions you can call me at 205.243.9304, email me, or connect with me on Facebook., Twitter, or Youtube.

 

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So, just how accurate is the Zillow “Zestimate” anyway?

February 18th, 2013 by Tom Horn · Appraisal, Appraisal Tips, FAQ's, FSBO Tips

PinExt So, just how accurate is the Zillow Zestimate anyway?

how accurate is zillow So, just how accurate is the Zillow Zestimate anyway?Have you ever wondered how accurate the Zillow “Zestimate” really is? Whenever I am doing appraisals I have homeowners tell me what their Zillow “Zestimate” is. I am sure they are hoping that my appraisal is similar to that number (if it is high), however the two could be close, but more times that not they are pretty far apart.

I actually just found out recently how you can determine the accuracy of Zillow in your area. Take a look at the video to learn how.

Zillow has gone back in time to compare their historic Zestimate with what the property actually sold for. They claim that their “estimated market value” is not an appraisal, but in reality an estimate of market value is an appraisal, but it’s one that cannot be used by a bank and one that you may want to think twice about before using to determine a sales price for your home. They provide a range in value which can vary widely. This information is based on public and user submitted data, both of which can vary in accuracy. County records in many states do not reflect newly finished areas or additions where a building permit was not obtained. Zillow explains that the further apart the spread from high to low the less accurate their estimate is. The counties in which various sources of information are available are typically the ones that are the most accurate.

I believe that you have to see Zillow for what it is and don’t expect much more.  Without actually looking inside a property, and using the human touch to sift through sales information, you are only going to attain a certain level of accuracy. Another thing I would like to point out is that computers do not recognize similar market areas. An example of this is school districts. In many cities property values are driven by what school district the home is located in, and I have seen Zillow comparables pulled from areas in different school districts, which can give an inaccurate indication of market value. One other very obvious area where inaccuracies can occur is with property condition. Appraisers are trained to research this information so that adjustments can be made. If a comparable is in inferior condition an upward adjustment will be made to reflect this.

The bottom line is that an appraisal made by a person is going to be much more accurate than a value estimate provided by Zillow or other similar website. Have you had a “Zillow” experience where the value was close? far off? I would like to hear your opinion so just leave me a message below.

If you have any real estate appraisal related questions you can call me at 205.243.9304, email me, or connect with me on Facebook., Twitter, or Youtube.

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Can a Realtor give comps to an appraiser?

February 11th, 2013 by Tom Horn · Appraisal, FAQ's, Realtor Tips

PinExt Can a Realtor give comps to an appraiser?

This is a question I hear all of the time. It seems like such a simple question but the implementation of various laws several years ago has confusedreal estate agent giving appraiser comps Can a Realtor give comps to an appraiser? real estate agents about whether they are allowed to provide sales comparables to the appraiser. Many believe they cannot even communicate with the appraiser, but this is not true. Every appraiser is different, however I appreciate any useful information about the subject property that is given to me and this includes sales comparables.

Please keep in mind that appraisers select comps based on various criteria including time of sale, distance, physical similarities, location, and condition & appeal, among other things. Our goal is to bracket the subject property with characteristics that are both superior and inferior to the  property being appraised. You can read another post of mine, “What is bracketing and why should Realtors do it?” to understand how this works. We can consider the sales you provide, but we may not end up using them if they do not meet the criteria we go by. I recently received a “packet” of information that a real estate agent put together, check it out.

Please do not make the number one mistake I see, and that is to provide only comps that are higher than the sale and or list price. If this happens then your innocent act of helpfulness could be construed as trying to influence the appraiser which is a no-no.

If you want to help out the appraiser you may want to follow these criteria:

  •  Provide sales that are inferior AND superior to the subject property.
  • If you have “inside knowledge” of these sales, such as what kind of condition they were in, or information about the terms of sale (divorce, reo,short sale, special financing) include that as well.
  • Don’t tell the appraiser what comps he should use.
  • Don’t tell the appraiser what comps he should not use.

It has become a fine line to walk if you want to talk to the appraiser but I think it can be done. I think the sharing of factual information can be helpful if it is done in a way that does not try to influence the appraiser. Do you have any questions about what you can and cannot talk to an appraiser about? Leave me a comment below and I will do my best to answer it for you.

If you have any real estate appraisal related questions you can call me at 205.243.9304, email me, or connect with me on Facebook., Twitter, or Youtube.

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