Appraisals – Part 2

Appraisals – Part 2

  What happens when you’re a Buyer or Seller and the sale is contingent on an appraisal? If there is a loan involved, the lender will “order” the appraisal. The appraiser will typically contact the listing agent to set a time to come view the property. The appraiser will take detailed notes and photos so depending on the size of the property, it can take anywhere between 30 minutes to 2 hours or more. An average 2000 square foot home will typically take less than an hour. In most cases, Buyers are not present for the appraisal. It is typically acceptable for a Seller to be present but not necessary. It is a great practice to provide a list of upgrades, including specific materials used, particularly if a major renovation has been done, very expensive or unique materials were used, or if the property itself is very unique – especially as it compares to other properties nearby that may be used as comparisons. Sellers ask if they need to have the property in “show-ready” condition for an appraisal. I always feel like it is a good idea. Appraisers are human and though they are looking at the property itself, not necessarily the cleanliness of it, condition is taken into consideration. If the property is a complete disaster, it could have a negative effect on the appraiser’s perception. It can take several days to a week or more to get the appraiser’s findings and value. If you are the Buyer, you have a right to the full report and the value. If you are the Seller, you will typically not be provided any information other than the fact that the appraised value was at least the purchase price – unless it wasn’t. If the appraised value comes back lower than the purchase price, the Seller will typically be informed of the value. There are several options if this happens. The purchase price can be lowered to the appraised value. The Buyer can pay the difference between the appraised value and the purchase price (this will need to be paid in cash). The Buyer and Seller can split the difference. The appraisal can be challenged and perhaps the appraisal will assign a new value based on new information. The contract can be terminated. Depending on the type of loan, the appraiser can also require certain repairs to be performed prior to closing. If this is the case, the appraiser will come back out to the property to inspect prior to closing and make sure that the repairs have been performed. Lastly, appraisals are a great reason to price your home correctly from the start. You may get a Buyer who will...

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Appraisals – Part 1

Appraisals – Part 1

  Appraisals. What are they and what do they mean? When you are buying or selling a property, if there is a loan involved, there is an appraisal done. The bank requires it to protect their investment and make sure the property is worth at least the purchase price. Appraisals can be done if someone is paying cash, as well. The Buyer may want to make sure they are not overpaying for the property. Lastly, a homeowner can have an appraisal completed on their home to come up with a realistic listing price or for home improvement purposes. An appraiser has very specific criteria he has to follow in order to “prove” the value of a property. They must start with properties within a 1-mile radius of the subject property. If the property is improved upon, they look for same or very similar floor plans first. They take location, upgrades, and condition into consideration. If you have new marble counter tops and your neighbor has Formica from the 70’s, you will get more credit for that. Appraisers will also take into consideration rooms with unique roof lines. For instance, if you finished out an attic space and the roof slants making it impossible for an adult to stand next to the wall, they can only use a portion of that square footage in their measurements, therefore, you won’t get credit for all that room being finished. Bedrooms must have a way to the outside to be considered a bedroom – so an exterior door or window must be present for safety. Basements are another point people question. Basements don’t always get valued the same as above grade areas. There are a lot of varying factors (how much is below grade, ceiling height, finishes, etc.). Be careful not to assume that your price per square foot will be the same on all floors if you have any below grade areas. An appraiser also must take into consideration the purpose of the appraisal. Different types of loans have different requirements and guidelines that appraisers must abide by. For instance, an appraisal for a VA loan is going to be much stricter than one done for a conventional loan. An appraiser may require some repairs be done on a VA appraisal that he would not require if it was being performed for a conventional loan. Next week we will talk about appraisals in the buying or selling process and what your options...

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How much is too much?

How much is too much?

  We have information at our fingertips, all day long. TV, print, Internet, social media, everywhere we look there is information. But, how much is too much? I catch grief about this, but, I rarely watch the news. I don’t believe we need to know all the details of a mass murder and innocent lives being destroyed every day. And, it’s not just the news. You can go on a number of medical websites and diagnose yourself with all sorts of horrible illnesses and be convinced you have meer weeks to live. I know that is taking it to an extreme, but we are armed with the information but not necessarily how to use it. When I go to a doctor, for example, I go either with symptoms I need resolved or an objective I would like met. Then, I leave it to the professional to assess my situation and give me the best possible solution, based on their knowledge and experience. Now, it is perfectly except a bowl to ask questions about something I have read, however a lot of public information is in accurate or does not fit my particular issue. How many times were you going to be given millions of dollars from Facebook or free airline tickets from simply typing a post on social media? It is a world of information overload and it is not necessarily making us better. I have found it can be detrimental into Waze. We can either read so much information that we feel we are an expert though we have never had a single day of formal training in a particular field, so we try to do it ourselves. Or, the opposite can be true, we read all the information and are so confused that it paralyzes us, and we do nothing. Read. Educate yourself. But then leave it to the professionals to do their thing. In the end, you’ll save yourself a lot of headache and, possibly, liability....

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Warning! Not All Agents are Created Equal

Warning! Not All Agents are Created Equal

I was in a Broker class yesterday. It was led by a Tennessee Real Estate Commission Board member. In my own paraphrase, the class was a warning that not all agents are created equal. And, while the attendees already knew that, the point was driven home even more by what we learned. The Tennessee Real Estate Commission or, TREC, receives complaints from consumers against real estate licensees. They, along with their counsel, determine the outcome of those complaints. Results range from dismissal of the complaint to revocation of licenses. In some cases, agents may only receive a written warning. In other cases, agents must pay a fine and/or attend a certain number of hours of continuing education. We were given examples of actual complaints and how they were handled. What was most interesting to the attendees (all attendees were Brokers, therefore, everyone had been licensed for a minimum of 3 years and most have been licensed for many more than that) is the lack of professionalism in the real estate industry today. I hate to say that out loud since that is my career, however, I think it’s important to acknowledge in the spirit of protecting the consumer. It is very easy to get a real estate license. And though there are requirements for continuing education, it may not be enough. The industry is changing so rapidly, that agents need to be educating themselves constantly. They need to attend events where they learn about products, industry changes, etc. and they need to become an expert. That is what consumers pay us for. I would warn that not all agents are created equal. When you are hiring an agent, here are some questions you can ask. You may also want to ask if they have ever had a complaint filed against them. Like any industry, there are bad apples, but also, good intending people make mistakes. If an agent has had a complaint filed against them, find out what the outcome was. It may not be a deal breaker. Most of all, it is likely that they learned from that mistake and it won’t happen again. Make sure they are a Broker or have a Broker they can go to for help. And don’t be afraid to ask questions along the way. Agents should protect you and should help take the stress out of buying or selling real estate, not cause more anxiety in the...

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