The appraisal process is becoming a major stumbling block for home buyers and sellers.
Realtors® are expressing a variety of concerns:
· Appraisers are being unrealistically overly cautious.
· Some appraisers are using foreclosures and short sales as the basis for evaluating market values, thereby encouraging price declines.
· The current bottleneck of appraisals is resulting in delayed appraisals and the use of appraisers who are unfamiliar with local market conditions.
· There’s a lack of comparables in some areas due to a market slump caused by economic concerns and local flooding.
The result is a rising number of mortgage appraisals that are coming in below negotiated sale prices. Low appraisals can be frustrating, costly to all parties involved in the transaction, and cause the deal to fall apart entirely.
Readers, have any of you experienced recent appraisal issues?
A messy neighbor can hamper your property by as much as 20% percent off the market value, says Sid Davis, author of A Survival Guide to Selling a Home. No one wants to live next to the neighbor with the overgrown yard, broken stair railings, littered yard, and completely neglected property.
So what should you do if you find that your property is living next to the “neighbor from hell?” A recent Universal Press Syndicate article by Ellen James Martin provides tips from Davis on how to resolve the problem amicably:
- Try to reason with the neighbors. Maintain a positive attitude when you approach them and don’t get a crowd of people to go with you, just you or one other person. You may find that they are willing to fix the problem.
- Volunteer to do the work yourself. “This is not about fairness,” Davis says in the article. “This is about getting the dump next door cleaned up so you can sell your house for a decent price.”
- File a formal complaint. You can do this with your neighborhood association or local government office. This should be done as a last resort. You and your neighbors may be referred to a mediator to attempt to resolve the issue, Davis says.
Just don’t ignore the problem, Davis says, because your potential buyers certainly won’t.
Read the full article
President Barack Obama’s budget includes an $800 million request to fund a government-backed reverse mortgage program through the Federal Housing Administration. At a minimum, the taxpayer subsidy means that costs won’t be rising on reverse mortgages, and that the government plans to make sure there’s still a liquid market for the loans.
Reverse mortgages allow homeowners aged 62 and up to borrow against their home’s value. The loan is paid back with interest when the homeowner sells the property or dies. These mortgages boomed as home prices hit new highs earlier this decade, but the market for those loans has largely disappeared now as home prices have fallen, leaving the FHA as one of the last sources for reverse mortgages.
The FHA insures loans against losses, but doesn’t make any loans. That means that if the agency guarantees a $250,000 reverse mortgage, known as a Home Equity Conversion Mortgage, and the home’s value has fallen to $225,000 when the borrower dies, the government covers the shortfall to the lender. The FHA collects insurance premiums from borrowers to provide that coverage.
Does it make sense to get a reverse mortgage? That depends.
Brokers say the program makes sense for cash-poor, but house-rich seniors who have exhausted their retirement savings, but have significant equity in their homes. But the AARP cautions that reverse mortgages should be done only as a last resort, after other alternatives have been exhausted. The reason: the mortgages are expensive, not only in terms of upfront costs and fees, but also when considering accrued interest and insurance premiums paid over the life of the loan.
Financial advisers are also skeptical of the benefits because the size of the loan after 10 or 20 years could be far greater than the cash received by the borrower. “This type of loan is only appropriate for those seniors that desperately need cash,” writes one financial adviser.
The expense of the loan may not matter to many seniors because they’re getting paid while they live in the home, and the payback doesn’t happen until they’ve moved or died. But a reverse mortgage could take a big bite out of the money borrowers collect when they sell their house or out of any estate they leave behind to their heirs.
Also, it’s important to consider what will happen if the borrower has to move out of the home unexpectedly to a retirement home or assisted living center. The borrower has to sell the home if they fail to live in it for more than a year, if they fail to pay property taxes and insurance, or if they fail to maintain upkeep of the property.
Lawmakers and regulators, meanwhile, are concerned more seniors are being sold the mortgages by vendors who are aggressively marketing ancillary investment products that could be unnecessary or risky.
Web sites for more information:
Now is the time to build a new home in Moorhead! As part of the state of Minnesota’s response to the 2009 spring flood, Governor Pawlenty signed legislation on May 16 that enables Moorhead, Dilworth, and other Minnesota border cities located in the disaster area the opportunity to offer a two-year property tax abatement on newly constructed homes.
Two-year abatement quick facts:
The property tax abatement is state-funded.
Single family attached and detached homes constructed in calendar years 2009 and 2010 are eligible for the abatement.
Single family homes constructed in 2008 that are owned by the original builder, not previously occupied, and not subject to a purchase agreement as of March 26, 2009 are included in the abatement.
The first $200,000 in structure value of single family attached and detached homes is abated.
- The tax abatement is applied to tax assessment years 2010 and 2011.
Applications for the abatement will be sent out to the permit holders on buildings already under construction; future projects will get the applications as permits are issued. The abatement will be credited to the owner of the property at the time taxes are due. It does not apply to special assessments.
Readers, will this news affect your home buying decision?
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U.S. housing officials are working on a plan that would allow some first-time buyers to purchase homes by paying little money upfront.
First-time home buyers would be able to put the $8,000 income tax credit towards their down payment on loans backed by the Federal Housing Administration (FHA.) Right now, home buyers must wait until they file their taxes to receive the credit.
The FHA is finalizing a program that would allow approved lenders, non-profits, and state and local governments to fund short-term loans that could be used as down payments to be repaid once the borrower received the tax credit. Once they received their tax credit, they would pay off the short-term loan and put equity into their home.
The FHA requires a minimum 3.5% down payment on loans backed by the agency, which means that buyers could put little or nothing down on homes up to $230,000.
The proposal is drawing some comparisons to the seller-funded down payment assistance programs that the FHA has worked to shut down. These programs allowed buyers to move into a home without paying any of their own money for the down payment. A concern is that the lenient underwriting standards, low down-payment requirements, and now the ability of FHA borrowers to purchase a home without putting any of their own equity into the purchase is creating a tremendous risk for the program and taxpayers in the future.
Readers, would you be more likely to buy a new home if you could spend this tax credit before you file your tax returns?
Some economic analysts say that the possibility that the economy will go into overdrive and inflation will skyrocket is a much more frightening possibility than the current recession.
One inflation hedge nearly all of them point to is real estate. Owning it outright is the best scenario, but if that’s not possible, a low-rate, 30-year fixed mortgage is the next best thing. As inflation drives up salaries, mortgage payments will stay the same, analysts point out.
Source: USA Today, John Waggoner (04/24/2009)
Think of a house as a theatrical stage. When it's not being used and is void of props and scenery, it lacks interest and rarely warrants a second glance. However, after the set designers have worked their magic, the space comes alive and sets a “scene” for the onlookers. Whether enticing, energizing, or relaxing, the ultimate goal is to elicit an emotional reaction and connection to that particular space.
The same applies to homes that are on the market. Without furnishings, many houses lack interest and buyers have difficulty imagining how the space would look furnished, not to mention picturing themselves living there.
Due to job transfers, divorce, tenants vacating, or a distant move, it’s not always feasible (or economical) to keep a home furnished when it goes on the market. So here are some simple ways to improve the marketability of a vacant property and increase the chances of a swift sale:
Curb Appeal: Buyers like to drive by prospective properties and many won’t make an appointment to see the inside if curb appeal is lacking. Have a plan for keeping the lawn mowed, shrubbery trimmed, flower beds weeded, and gutters and windows cleaned. Also, eliminate any items left behind in the yard that aren't included with the house or that make the property appear unkempt.
Odors: Potential buyers are often greeted with a blast of stale or mildew-ladened air when they enter a vacant house. Deal with the mildew before the house is listed. Leaving the heat or air conditioning running while the house is on the market helps to reduce odors. It also makes the house more inviting and comfortable to be shown when the temperatures are extreme.
Cleanliness: Houses that remains vacant and unsold for any length of time will need periodic cleaning. Dust, cobwebs, and bugs tend to take over if routine cleaning isn’t maintained. Some buyers get the impression that a house will require repairs if it looks dirty, cluttered, or abandoned—which can dramatically impact whether they make an offer and how much they offer.
Lighting: Bright, well lit rooms look bigger and create a more inviting atmosphere. Make certain all light bulbs are working and that light fixtures are clean. Any dated or outlandish light fixtures should be replaced with more modern and simple fixtures. If you take light fixtures with you, make sure a replacement is hung. For closets, attics, or crawl spaces where there is no lighting, install battery operated light disks sold at all home improvement stores.
Confusing Rooms: Some buyer’s can’t make sense of the floor plan in an unfurnished house. If a room’s function cannot easily be identified, if it looks out of place, or negatively impacts the flow of the house, have a game plan ready. If the situation cannot be corrected or minimized, consider either furnishing the space to eliminate the confusion.
Dual Functioning or Multi Purpose Rooms: Many homes are being built these days with rooms that serve dual or multi purposes. For instance living/dining rooms; kitchen/office areas; and family room/play room/homework area. Because many buyers have difficulty envisioning a room in any other way than the way they see it, it’s important to show or them the potential uses for the room. Use area rugs to better define the individual functions of a room—place one where the dining room furniture would be and another where the living room furniture would be.
Vignettes: It’s often hard for buyers to get a feel for the size of a room when it's vacant. Furniture provides a gauge. If completely furnishing a room is out of the question, consider either adding a few essential pieces—for instance, a queen or king size bed in a master bedroom that might appear too small to accommodate one. Better yet (and more economical), create a “vignette” … a mini scene … a cozy seating and conversation grouping. The ingredients could be as simple as one or two chairs, a small table, lamp, and a touch of silk greenery. Pull it all together to create a scene or snapshot of what the room might look like. Buyers often like to sit down in a home they're considering buying to get a sense of how’d they’d feel living there. Creating a simple vignette facing a dynamic view, in front of a fireplace, or in a room that oozes charm and comfort could be the deciding factor.
A well planned strategy for selling vacant properties is imperative in all markets—sluggish or hot. Creating an inviting environment is the best way to get prospective buyers to emotionally connect and picture themselves living there.
Set the stage to get your house sold!
Want to know what kitchen and bathroom trends today are apt to wow you soon in showrooms and homes? Here's the scoop straight from the National Kitchen & Bath Association' annual convention:
Green. With the green wave spreading, manufacturers are bringing out more products like stainless steel and glass that can be reused when life cycles are up. Plus, growing in popularity are more products that save energy, conserve water, and are made locally.
Beyond granite. Granite countertops may still reign because they’re practical, but glass, stainless steel, and mahogany are gaining a foothold.
Black and white kitchens. The all-white kitchen is being tweaked with crisp black. One example: white cabinets on the perimeter, black on the island.
Faster, healthier. Steam ovens will captivate health-conscious buyers who also desire moist food cooked quickly.
Less space. With many people now opting to downsize, manufacturers are debuting smaller 15” refrigerators and 18” dishwashers. Less space also means fewer multiples—one instead of two sinks. Mirrored backsplashes and higher vaulted ceilings also help to magnify space.
Greater value. To keep prices down for cost-conscious, value-oriented home owners, manufacturers are limiting selections but maintaining quality.
Multiple levels. The two-tiered island in multiple colors has gained ground to provide an upper-level eating and serving ledge that conceals dishes in the sink on the lower level. Wine coolers are often built in for entertaining pleasure.
Less maintenance. Since saving time and expense are on home owners’ minds, manufacturers now deliver longer warranties on everything from equipment to hinges and finishes.
More modern. Simple, straight contemporary lines, floating cabinets, and no toe kicks offer the hot contemporary look.
Dual, more private. Toilets with dual flushes are catching on, as is placing a toilet in its own private cubicle.
Two-thirds of sellers opting to sell their home themselves found some aspect of the home sale to be difficult. The tasks they found most difficult differed depending on their relationship with the buyer.
For those who knew the buyer, 12% found getting the price right to be the most difficult task; 9% found devoting time to the sale most difficult; and an additional 9% found selling within the amount of time planned to be most difficult.
Among sellers who did not know the buyer, the top three difficulties were selling within the length of time planned (16%), fixing up the home for sale (15%), and getting the price right (12%).
One-quarter of For-Sale-By-Owner sellers took no action to market their home, and 72% did not offer any incentives to attract buyers.
President Obama took time on Thursday to promote mortgage rates that have fallen to new lows. But, in a note from the president’s Council of Economic Advisers, the White House explains that, while the level of loans for home purchases has risen by 19% since the administration rolled out its homeownership plan in mid-February, the level of mortgage applications remains depressed relative to levels seen in 2002 when home sales began to accelerate as lending standards loosened.
Meanwhile, refinancing applications are up 88%. At a White House roundtable on Thursday, the president touted refinancing as stimulus for borrowers who can take advantage of low rates to lower their monthly payment. “That is money in their pocket,” Mr. Obama said.
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It’s hard to remember what your home needs throughout the year. Use the home maintenance checklist to prevent unnecessary and expensive problems down the road.
· Check sump pump for correct operation and drainage.
Learn more: Sump Pump Maintenance
· Check gutters and downspouts for damage or proper drainage; repair and clean if needed.
Learn more: Gutter and Downspout Maintenance
· Check and clean mechanical ventilation system (HRV) or continuous exhaust system using the tissue test.
Learn more: Ventilation Equipment Maintenance
After the news that the Federal Reserve would buy as much as $300 billion of long-term U.S. Treasure securities, the rate on a 30-year fixed mortgage fell to 4.75% and may go even as low as 4.5%. That would be the lowest mortgage rates since World War II! In 1945, the average annual rate for a mortgage was 4.7%,
Still, the low rates, on top of the $8000 homebuyer tax credit, may not be enough to entice buyers. If you’re worried about losing your job, buying a new home isn’t on your list of priorities. Plus, even if you’re game to jump into the market, tightened lending standards and new restrictions from Fannie Mae are making it difficult to get a mortgage. Citigroup reports, “We continue to hear from homebuilders about the inability of potential buyers to come up with even the minimum 3.5% downpayment necessary for an FHA-insured loan. Also, homebuilders have run sales in which they have agreed to sponsor low mortgage rates and the uptick in sales has typically been marginal.”
For those who qualify for financing, and are considering a home purchase, now is the time to buy. Favorable interests rates allow you to purchase more home for your money than has been possible for a long time.
Readers, anyone looking to buy a home? Tell us your story.
While the Obama administration's housing plan allows some homeowners to refinance even if they don’t have equity in their homes and subsidizes the cost of lower monthly mortgage payments for borrowers at risk of default, it appears to leave one group out in the cold -- renters. That's upset some who sat out the housing boom and rented only to see taxpayers come to the rescue of some homeowners who are in over their heads.
There are, however, benefits for the renter:
In several housing markets, home price declines have ushered in housing affordability that's near its lowest level in decades;
The stimulus bill enacted last month offers an $8,000 tax credit for first-time home buyers and expands funding for rental programs offered through the Department of Housing and Urban Development; and
More help could be on the way for renters who now face eviction because their landlords have gone into foreclosure. In Congress, Rep. Keith Ellison (D., Minn.) has introduced a bill that would require anyone who buys a property at a foreclosure sale to give a tenant 90-days notice before eviction. Freddie Mac has also finalized its guidelines that will allow non-owner tenants to continue renting in homes that have gone into foreclosure on a month-to-month basis. Freddie will also allow owners who have lost their homes to foreclosure to rent the homes under similar leases.