Avoiding Low Appraisals – What Can a Homeowner Do?
A few weeks ago, we talked about an obstacle to home sales – a low appraisal. It’s a common problem, and it can spell the end of a deal. There are some courses of action to take if the appraisal does come in low, but what about heading off the problem before it happens? Can you do anything to help a client minimize the possibility of an undervalued appraisals.
Experts say, yes, to a degree. “In today’s climate, I can’t stress enough: condition, condition, condition,” said Doreen Zimmerman, an appraiser in Paradise, Calif. You can’t control the size of the property or where it’s located, but you can make an impact by ensuring the house is up to snuff. Here are some ideas to share with clients:
1. Spiff it up. An appraiser looks a number of things, but one is the condition of the house. Carpet stains, broken fixtures, overgrown hedges, and dishes in the sink all give the air of a home that’s not as well cared for as it could be. It may also hide the property’s most distinctive and attractive features, leading to a lower condition category.
Take a step back and look at your home as if you were visiting. What strikes you? Are toys everywhere? Tuck them away into a play area or back in the kids’ rooms. Are there handprints along the hallways? Clean them. Are weeds taking over the planting beds? Tidy them up. Make beds. Wipe counters. Hang up towels. Simple things, but they matter.
2. Provide a list of updates. An appraisal considers whether a home has been updated or not, so have a detailed list of anything you’ve done. It should include what it was, when, and the approximate cost. Include even items you think are minor – new sinks, new faucets, light fixtures, etc. as well as big things like a new roof or countertops.
3. Compile a list of comparable sales in your area. It’s true that your appraiser will do this as part of the process, but today, there are many short sales and foreclosures that bring down comparables. If you know home sales in the area that support your price, share them. It can’t hurt. If the closing was very recent or the house wasn’t listed on MLS, the appraiser may not have them yet.
4. Let the appraiser do the job. As anxious as you are to have a solid appraisal, you don’t help the situation by following him, trying to make your case. Talk before or after, and then let him do the walk through. Keep your pets confined, too. A hissing cat or growling dog is irritating and won’t help the process.
For more details on appraisals, and why working with a lender that uses local appraisers is important, give me a call. I’m happy to work with you to maximize your success.
Source: http://realestate.msn.com/10-tips-to-boost-your-homes-appraisal
Mortgage Minute May
The majority of your first time homebuyers are in Generation Y, which means they have grown up with specific expectations that are different from other clients. They are more technologically savvy than any generation before them, and they utilize this technology in distinct ways. Find out more about how to reach your Generation Y first time homebuyers today! Then, we head out to the streets to test people’s knowledge on the financial industry. This month we ask “What is an A.R.M”.
Low Appraisals – What Can You Do?
It’s argued that overly generous appraisals were a contributing factor in the housing bubble from which we’re trying to recover. But, now the pendulum has swung, and many in the real estate industry are lamenting what seems to be overly conservative appraisals.
Here’s an example of what happens. A buyer and seller agree on a price for the home sale. An inspection is done, credit worthiness checked, and all is moving ahead smoothly. But the appraisal comes back lower than the price everyone has agreed to. What now?
Well, the buyer and seller have a few options:
1. The buyer can walk away from the deal if their offer contained a financing contingency. The bank lends on the appraised value, not the higher sales price, therefore, the buyer is not able to secure financing at the original terms, and this can negate the contract. However, many buyers are emotionally attached to the house by this time, and they don’t want to begin their home search all over again.
2. If approved, the seller can secure another appraisal as a second opinion. There are many reasons appraisals can vary from one professional to another. A big reason is simply familiarity with the area. An appraiser who’s worked and even lived in the geographical area they are servicing can make more accurate valuations because they recognize true comparables vs. outliers, know the schools, and understand the subtle amenities that elevate home values in certain neighborhoods. An inexperienced appraiser or someone from out of the area doesn’t usually have the background to take those factors into account. In the end, appraisers offer “opinions” of value, and sometimes opinions can be flawed.
3. The seller can agree to drop the price. The benefit is the closing will still happen, but for less. Otherwise, the home goes back on the market and the process begins again. In a buyer’s market, there’s no certainty that another offer will come soon, or that other buyers will offer the same price again.
4. The buyer can agree to come to the deal with a larger down payment that covers the gap between what the lender will finance and the sales price. It’s not a common scenario, but it does happen.
One way to keep this from happening to your clients is to work with a lender that is committed to using local appraisers. Our approved appraisal list includes local experts who are very familiar with their markets. We even work with our partners to have local appraisers added to the list.
Watch for a future Mortgage Fortune on how you can try and prevent undervalued appraisals from happening in the first place.
Source: Brokeprofessionals.com
Short Sales Gain Steam – Finance Them Properly
Short sales have been anything but! Most take several months, but that will soon change. There have been recent proposals that this summer Fannie Mae and Freddie Mac will implement new guidelines that require servicers to respond to short sale offers in 30 days or within 60 days if multiple stakeholders, like mortgage insurers, are involved.
The new rules would streamline the short sale process, which is stressful for sellers and frustrating for potential buyers who have to endure months of waiting to find out if their offers will be accepted.
More Short Sales Than Foreclosure Sales
Short sales have overtaken foreclosure sales in recent months, according to Lender Processing Services Inc. (LPS). This is a flip-flop from a year ago. Some experts believe servicers are becoming more willing to approve short sales because the loss in that scenario is usually less than the carrying cost of a foreclosed property.
For buyers or investors, the abundance of distressed properties continues to offer opportunities. LPS notes the sales price of short sales was 23% less than similar non-distressed properties in January 2012. So, the new 30-day requirement, coupled with bargain prices and interest rates that are still at historic lows, may be the combination that finally moves short sales.
Don’t miss out – partner with a lender who is experienced in the intricacies of short sales, like us. We’ve been involved in numerous short sales transaction, and we’re committed to making the process as smooth as we can by being available, responsive, and proactive, providing regular updates to all of the parties involved.
Short sales will continue to be a strong market for housing this year, and I hope you will let me help you take advantage of it.
Source: Housing Wire, Bloomberg BusinessWeek
Technology Trends and Tools – Part II: Getting Email Read
The internet is a powerful force, with enough information passing through it daily to fill 168 million DVDs! Its popularity has led to the popularity of many of our “must have” devices: in fact, on a given day, iPhone sales outpace the number of babies born!
However, with all of this excitement, email still remains the most common way you’ll interact with your customers. 294 million emails are sent daily – that would take two years for the US Postal Service to deliver! So how do you use it to your best advantage?
Subject Lines: Words to Avoid
The average person around the world gets 147 emails a day and spends 2 ½ hours with them, but interestingly, we delete almost half of them in just 5 minutes! How can you increase the odds that your email makes it though the delete process and gets opened?
One way is by avoiding certain words in your subject lines and using others. Research shows words that generate the greatest response in subject lines are: posts, jobs, e-newsletter, digest, bulletin, edition, giveaway, tips. Words that caused readers to report the emails as spam were: confirm, featured, upgrade, raffle, magic, requested and rewards.
Reply Quickly
It’s common courtesy and good business! A quarter of us now expect a response to email within 15 minutes, and two-thirds within half a day. But you also need to balance that with email overload, which is when you interrupt other important tasks by addressing emails inefficiently.
Mobile-Optimized Email
You may not think you need to worry about your email being mobile-friendly… after all, it’s just email! But 80% of users report reading email on smart phones, so test yours and make sure they can navigate and read it easily.
Source: Mashable.com, http://www.slideshare.net/HubSpot/the-science-of-email-marketng, Dr Monica Seeley
Video: Why A Second Opinions Is Good for Business
True or False? Homebuyers reviewed more offers for a new computer than their home purchase. Learn the answer in this edition of the Mortgage Minute, it might surprise you!
Shelter Mortgage President Jill Belconis, also talks about why your customers may benefit from obtaining a second opinion on their home loan. Then watch and test how much you know as we play Fact or Fiction. What’s true and what’s not in the industry? Find out by watching our Fact or Faction game!
Technology Thoughts and Trends for 2012
Every few months, there’s a new development in technology that grabs the headlines and offers to transform the way we work. Easier, faster, more flexible. As a result, working on the road, away from the office, has never been easier, and so far, this year, new trends are emerging that offer even greater productivity for real estate professionals!
1. Tablet usage is growing: According to a recent study, tablets make up 30% of non-desktop computer traffic, and that is growing. Apple CEO Tim Cook has predicted that tablet sales will outpace PC sales by the end of this year!
Tablets and real estate are a natural pairing. A tablet like the iPad cannot replace a laptop; instead it’s an additional tool that’s well suited for use in the field – it’s light weight, aesthetically impressive, and powerful when it’s loaded with the right apps. And there are many! Dropbox, Evernote, Trulia, and Zillow to name a few. To make it foolproof, you will need 3G in case you’re in an area with spotty Wi-Fi. With web-based presentation apps like Prezi, you can also put together slick presentations for clients and other colleagues that really “wow” on a tablet.
2. Cloud computing
For the techies among us, you already know all about being in the “cloud.” Cloud computing means having all of your data available to view, edit and share from wherever you are, if you have an internet connection. If you set it up, it’s also available across multiple devices and information can be synched between them. You can upload photos from properties, listings, or documents and then download them to view, exchange and collaborate with colleagues and clients, and more! You can even have clients sign paperwork with apps like EasySign, right on the tablet screen and then email them or place them in Dropbox to print back at the office. Being in the cloud is fast, and storage is secure, and often free. And it allows you to do almost everything you do right at your desk.
3. Wi-fi cameras
Cables? What are those? Some new debuts in the camera world allow you to send photos and videos to your computer from a Wi-Fi spot, saving you a ton of time and hassle looking for the right cable or pulling out your memory card to download images. Removing that extra step gives you more time for making a few more calls or getting information to a customer or another real estate professional that much faster.
4. Mobile usage
The number of people accessing the internet on their mobile device is exploding; the number has almost doubled every year since 2009! And one half of all local searches are done from a mobile device! That means that your marketing strategy must take into account how you can cater to those buyers, who expect quick answers while they are driving through neighborhoods and want to know about a specific property. If you do already use QR codes, be sure that they link to a mobile-friendly site or you may lose your lead when they become frustrated trying to view a poorly-rendered full website on their phones.
Watch for Part 2 of Trends in Technology and how you can apply these trends to making your business more efficient and successful.
Sources: Digitalbuzzblog.com, Comscore study – November 2011, Smartinsights.com
