Birmingham Appraisal Blog » Appraiser

How Shelby County, AL homeowners can find useful property information online

Tom Horn — Mon, 06 Feb 2012 14:46:32 +0000

I would like to share with homeowners in Shelby County, Alabama how they can find useful property information online. Have you ever wanted to find out exactly how big your lot is? Ever wondered where your house sits on your lot? How about finding out what school system the house you want to buy is in? These are all questions you can find the answers to by going to the Shelby County, Alabama website here- www.shelbyal.com. Take a look at the video below and see what type of information you can get.

Were you able to find any useful information? Do you know of any other websites where homeowners can get helpful information for free?

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.

Market Value: The X-Factor in Most Real Estate Transactions

Tom Horn — Wed, 16 Nov 2011 15:07:28 +0000

Most people have a good idea of what market value is. A short and abbreviated definition of Market Value is as follows:

Market value is the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus.

A common thread I have seen in many failed real estate transactions is the failure to start with market value and work backwards. I will give you two examples and explain to you how most people approach them contrasted with how I, as an appraiser, believe they should be approached. Many people are familiar with the process of buying a house and flipping it for a profit. Many times this is done successfully, other times not so much. Some investors do this successfully while others fail because of their flawed understanding of cost and value.

Some investors begin by looking at what they paid for the property then add the cost of improvements to arrive at a list price for the property. The problem with this scenario is that cost does not always equal value, meaning that just because you paid $50,000 for a property, invest $25,000, and require a 15% profit, does not mean that you can ask and get $86,000. The market may not support that value for the house in the current economic climate. A better way to approach this is by determining what sales price the market will support and working backwards from this number. This will help you determine how much you should pay for a property and how much in improvements you should invest, as well as covering your desired profit. I have seen many investors attempt to do it the first way I described and resort to dropping the asking price because the market will not support their original price. The bottom line is that the price is lowered, which reduces the profit from the investment.

The second scenario involves homeowners attempting to sell their home. Many owners arrive at a list price by looking at what they owe on the house and then adding in the cost of improvements they have made over the years. While this may sound like the logical thing to do the price may not be supported by the market. Some homeowners may have put too much money into their home, either by over paying for home improvements or by over improving the home for the neighborhood. It is always a good idea to find out if the value added is more than the cost of the improvements. It would not make sense to invest $25,000 in a swimming pool if the market (ie potential buyers) will only pay an extra $15,000 for that amenity. I use the pool as an example because that is one of the most common improvements that does not give you a good return on your investment. Have you experienced what I have described here? What was your outcome? I would be interested in hearing your story.

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.

Could Alabama Appraisers Be In Violation Of State Law?

Tom Horn — Thu, 13 Oct 2011 16:06:37 +0000

Do you do work for Appraisal Management Companies (AMC’s)? If you do and they are not registered with the Alabama Real Estate Appraisers Board, you could be subject to discipline. As of October 1, 2011 any AMC’s doing business in Alabama must register with the state. Pursuant to §34-27A-20(a)(9) of the Alabama Real Estate Appraisers Act appraisers must not accept assignments from an unregistered AMC. It’s easy to check if they are registered, just go to the state’s website.

AMC’s are companies that manage the appraisal process by working with lenders and appraisers. Lenders typically hire the management company to do the appraisal ordering and quality control aspect of the loan process. This supposedly puts a layer of protection between the loan officer and the appraiser. This became an issue recently with the collapse of the real estate market and the accusation by some that lenders and appraisers were working in collusion to make real estate deals work. Some lenders would find appraisers that would give the values they needed to close a loan. Businesses recognized this as an opportunity to provide a service to the real estate industry. Up until the passing of this law in Alabama and other states, the AMC business had little regulation. This law seeks to help regulate the industry and make AMC’s more accountable for their role in the process.

So before you do any work for an AMC, please check out their status with the state so that you avoid being disciplined.

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.

The Media Is Now Confirming What Appraisers Have Been Reporting All Along

A Man’s Home Is His Castle, Right?

Tom Horn — Mon, 11 Apr 2011 12:22:03 +0000

We’ve all heard the old saying that a man’s home is his castle, right? This was exactly what I thought of when I saw this house in Shelby County, Alabama.

It got me to thinking about personal taste and how that may translate into how others may feel about architectural styles that are atypical. Do you think that this style of home would appeal to others? While not a hard and fast rule, past experience has taught me that homes like this take longer to sell. Have you had any experience in buying, selling, or appraising a home with a unique style? I would be interested to hear your story.

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Are You Secretly Under Surveillance?

Tom Horn — Thu, 13 Jan 2011 14:06:01 +0000

Have you recently moved into your dream home in a great neighborhood, only to find out that you are secretly under surveillance? Have you looked out your windows to see someone taking pictures of your home? Do they speed off when they see you so they can’t be caught? You may consider it a fluke if this only happened once, but it has happened several times. Why are you being spied on?

I’ll tell you why. Because you recently bought your home, and that person taking pictures of your house is probably a real estate appraiser. They are taking pictures of your house to use as a “comp” in another appraisal report. Is it all becoming clearer now? Good, no need to contact the authorities. In case you’re not familiar with how the appraisal process works (or if you are and just forgot) appraisals are based on what other comparable properties have sold for. We find other similar homes that have sold and use them in our reports, including pictures.

I have had my fair share of experiences while taking pictures, including being pulled over by a police officer and being chased down by a homeowner in their car. If you are a homeowner have you had an experience like this? If you are an appraiser have you been “pursued” for taking pictures of peoples houses? I would like to hear from both sides because I know there are some funny stories out there.

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Birmingham Alabama Appraiser : Hoover Alabama-Greystone Market Trends-2010 Update

Tom Horn — Thu, 06 Jan 2011 15:56:21 +0000

I recently did some market research in the Greystone development of Hoover, Alabama for an appraisal assignment I am working on. This development is one of the more popular subdivisions in the Hoover, Alabama market. The neighborhood surrounds a championship golf course that has hosted The Seniors Tour in the past. Although the Greystone development is one of the premier neighborhoods, it has also been effected by the overall slow real estate market.

The price range I was working in was between $500,000 to $1,500,000. Over the past several years homes over $500,000 have had a hard time selling, as I have reported previously and can be read here. I have found numerous foreclosure sales in this price range, not unlike homes in the lower price ranges. I have included a chart of sales of homes over $500,000 that have sold from 2005 to present. If you look close enough you can see a trend of fewer homes selling over this time period. There have been homes in the upper price ranges sell, however they have become less numerous.

In addition to the above graph, which gives raw sales data, I have included neighborhood data from the past 12 months. This data analyzes sales, current active listings, months of inventory, and median sale price to median list price ratios among other things. Here is information from the 1004MC (Market Conditions) form:

What this data tells us is that the number of sales and the absorption rate (total sales/months) is relatively stable (minor variances noted). The months of inventory, or how many months it would take to sell all of the homes, is declining. This is good because it indicates homes are selling faster than new ones can be listed. The median sales price over the entire 12 month period is relatively stable (again, taking into consideration minor variations from the first period to the last), and the days on market is declining. A decline in the days on market reflects positively on sales activity. If people are not buying then a house will stay on the market longer.

Information regarding active listings and their days on market also show that list prices are holding steady, however the listing days on market is declining. An interesting figure is the sale price to list price ratio. In the first and last period it was 80%, and the middle period it was 102%. This indicates that, as a whole, the median sale price of sold homes is approximately 80% of what they were listed for. In other words they were priced too high to start off and then the list price was dropped to meet the market demand (which has been effected by foreclosure sales) . The bottom line is that a large number of recent foreclosure homes have sold which has decreased the median sale price. These foreclosures are the comparables appraisers have to use in their assignments and that have caused the value of other homes to decrease. Their use is necessary because they make up a large percentage of all of the closed sales, and are therefore influencing the market.

If you have any questions that I can answer for you please give me a call at 205.243.9304, send me an email, or connect with me on facebook.

Birmingham Alabama MLS Adds Square Foot Option to Listings

Tom Horn — Thu, 29 Jul 2010 18:48:56 +0000

The Birmingham Alabama MLS (Multiple Listing Service) has recently added an option for Realtors to list GLA (gross living area) for their listings. The new feature will go live on August 2, 2010. Realtors are given an option of entering GLA data obtained from an appraiser, building plans, or tax records.

The first two sources are reliable, however tax records can be tricky in our area. I have found that tax records are most accurate with one level homes that are either on a slab, crawlspace, or that may have some unfinished basement. It is less accurate with homes that have a second story and/or finished area in the basement. These areas are difficult to determine without going into the home. To complicate matters, the county is not notified of some improvements, making their records potentially inaccurate.

If a previous appraisal or plans are not available I suggest the realtor obtain the services of a qualified appraiser to measure their listing so they can present the most accurate information possible. There are standards for measuring homes that have guidelines for what is counted as livable space and what is not. The appraiser you choose should be familiar with these. I offer this service to all Realtors in the Birmingham, Alabama area. The fee is based on the size of the home and in addition to getting the square footage information you also get a floor plan sketch with location of rooms. This sketch can be included in your listing. A more detailed drawing is available for a slightly higher fee if this is desired.

My question to all Realtors is this: would you be interested in getting accurate GLA of your home to provide to your buyers and make your listings stand out by having a sketch of the home? If you have any questions please give me a call at 205-243-9304 and I would be happy to answer them for you.

How to Find an Appraiser in Birmingham, Alabama

Tom Horn — Sat, 01 May 2010 06:13:39 +0000

Whether you need an appraisal in the Birmingham, Alabama area to set a listing price, settle an estate for tax appeal purposes, divorce or bankruptcy we’re only a click away using Google. We would be glad to discuss with you your requirements to see if we can help you out. Consultation is always free. Of course you can always call us at (205) 243-9304 as well.

Getting The Most Bang For Your Buck In Home Improvements

Tom Horn — Wed, 14 Apr 2010 22:10:15 +0000

If you’re like most homeowners you want to get the most bang for your buck in home improvements. Sometimes certain improvements to your home cost more than the value you get from them. This is one of the most frequent questions I get asked in my job as a real estate appraiser. My answer most of the time is “it depends”. I don’t mean to be so vague but there are a lot of factors that we have to look at when determining the “market value” of improvements. Some of these factors include your location: what types of improvements are typical in your neighborhood or market area; the cost to make these improvements: the lower the cost may result in a higher return on your investment; and also the quality of workmanship: it may be worth the extra money to have a licensed contractor do the work for you.

It wouldn’t be wise to make your home 5,000 square feet (s.f.) if the typical home is 2,500 s.f. or build a taj mahal pool and pool house if these are not common in the area. By looking around the area and knowing your neighborhood you can get a pretty good idea of what is typical. This is not to say you cannot make the improvements you want to but you may not be able to get the money back when you sell the home. Now some people will say that they are going to be in their home until they’re buried, and they want their home to be like they want it, which is fine but you should be aware that circumstances change.

A good way to see what typical improvements cost and their value is to check out a remodeling website like the one I have linked here. It will give you the information you need before you begin a project and help you to be informed about what you can expect to get back. For major renovations you may want to get an appraisal to see the value impact of the improvements on your homes market value. Please call me if you have any questions at (205) 243-9304.

Hello Everyone!

Tom Horn — Sun, 07 Feb 2010 20:18:11 +0000

Welcome to BirminghamAppraisalBlog.com. My name is Tom Horn and I am a residential real estate appraiser in the greater Birmingham, Alabama area. I have set up this blog to pass along information I gather on a daily basis that may be of benefit to someone. I may sometimes run into something in my work which I address here and, I hope, may help others that may have a similar issue and needed to find out more information about it. In addition, I may comment on something I saw that may be humorous or informational. I see a lot of funny things, which is good, because as they say “laughter is the best medicine”.

You can find out more about my professional credentials in the “about” tab above, but for now I just wanted to tell you a little about my personal life. I am 45 years old, married, and have two children, a boy and a girl. In addition, we just got our first dog from a local animal rescue. I’ve always heard that shelter animals are always the best and “Cassie” has not disappointed us in that respect. Although we have only had her for 1 week, she has been great. It’s amazing how much love an animal can give considering they have not had a very happy life. Besides work, I spend the rest of my time doing family things. We are blessed to live in a great area for camping and doing outdoor activities. This is also an area that has great college football tradition, so we have a great time during college football season. Finally, we are blessed to have a great church family, one which helps us to continually grow in our love and knowledge of Jesus Christ.

I hope that the information I cover here can be of benefit to others. Whether it be information regarding how to maximize the appraisal value of your home to a list of the top five things that a home has to have to pass an FHA appraisal inspection. Another area I am looking forward to developing is one on market trends. Each time I produce an appraisal I perform study on the price levels and sales and listing history of homes within the neighborhood. This may be helpful to others in the neighborhood and I will attempt to publish these for public viewing. I always welcome suggestions on topics to cover, so please let me know if you have any. Thanks for reading!!

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