MYTHS AND FACTS ABOUT APPRAISALS

Consumers tend to have some misconceptions about the appraisal process

If you’ve ever watched “Antiques Roadshow” on PBS, you’re already familiar with the concept of an appraisal. The idea is similar in the realm of real estate valuations. Each property is unique, and the appraiser relies on his or her general expertise and specific research to arrive at an opinion of value. Appraisals are an infrequent experience for most consumers, who consequently tend to have some misconceptions about the process and the results.

Here are some myths and facts:
Myth: The primary purpose of an appraisal is to make sure the buyer doesn’t pay too much for the house.
Fact: An appraisal provides valuable information for the buyer and the seller, but the appraiser’s primary mission is to protect the lender. Lenders don’t enjoy owning overpriced property any more than they relish lending money to irresponsible borrowers. That’s why the appraisal takes place before the lender grants final approval of the buyer’s loan.
Myth: Appraisers use a specific formula, such as one using the price per square foot, to figure out exactly how much each home is worth.
Fact: Appraisers weigh the location of the home, its proximity to desirable schools and other public facilities, the size of the lot, the size and condition of the home itself and recent sales prices of comparable properties, among other factors.
Myth: Good housekeeping can improve a home’s valuation.
Fact: Appraisers aren’t interested in dirty dishes or dusty dressers, but they do notice such signs of neglect as cracked walls, chipped paint, broken windows, torn carpets, damaging flooring and inoperable appliances.
Myth: Anyone who has a clipboard and business cards can be an appraiser.
Fact: Federal law requires states to establish minimum standards and licensing practices for real estate appraisers. In California, for example, trainees must take several courses, pass an examination and complete 2,000 hours of supervised experience.
Myth: Appraisers have no obligation to reveal home defects to buyers.
Fact: If the buyer is applying for a mortgage that will be insured by the Federal Housing Administration (FHA), the appraiser must survey the physical condition of the home and disclose potential problems to the buyer. No such obligation exists for non-FHA mortgages.
Myth: An appraisal is identical to a home inspection.
Fact: The FHA disclosure requirement notwithstanding, an appraisal isn’t a substitute for a professional home inspection. The appraiser formulates an opinion of the property’s value for the lender, while the inspector educates the buyer about the condition of the home and its major components.
Myth: If the appraiser’s opinion of value is lower than the purchase price, the buyer won’t be able to purchase the home.
Fact: A transaction can sometimes survive a “low” appraisal if the seller reduces the purchase price, the buyer makes a hefty downpayment or a separate escrow account is set up to fund repairs that will increase the value of the home. On rare occasions, an appraiser will reconsider his or her opinion if new evidence supports a higher valuation.

HOME SUPPLIES FALL TO 7.0 MONTHS NATIONWIDE; BUYER DEMAND STRONG

Home resales moved to a 10-month high in November, the latest in a series of strong showings from the housing sector.

According to the National Association of REALTORS®, November’s Existing Home Sales rose to a seasonally-adjusted, annualized 4.42 million units nationwide —  a 4 percent climb from October 2011.

An “existing home” is a home that has been previously occupied and cannot be categorized as new construction.

Home buyers and sellers throughout boca should take note of November’s numbers because — behind the headlines — there’s a series of statistics that foretell higher home prices ahead.

First, the total number of homes for sale nationwide dipped to 2.58 million, an 18% reduction from November 2010 and represents the fewest number of homes for sale since February 2007.

At the current sales pace, the complete home resale inventory would be sold in 7.0 months.

And, second, the real estate trade group reports that 33% of all homes under contract “failed” for some reason last month.

Contract failures can occur because of mortgage denials in underwriting; home inspection issues; and homes appraising for less than their respective purchase prices.

In other words, despite a reduction in the number of homes for sale, and a rash of failed contracts, Existing Home Sales volume is still on the rise.

Broken-down by buyer-type, here’s to whom home sellers were selling in November :

  • First-time buyers : 35% of home resales, up from 34% in October 2011
  • Repeat buyers : 46% of home resales, down from 48% in October 2011
  • Investor buyers : 19% of home resales, up from 18% in October 2011

Given high demand for home resales and shrinking home supplies, we should expect that eagle trace home prices will rise through December 2011 and into early-2012, at least. Recent Housing Starts data supports this notion.

Thankfully, mortgage rates remain low. Low mortgage rates help keep homes affordable.

PAY YOUR MORTGAGE EARLY, BOOST YOUR 2011 FEDERAL INCOME TAX DEDUCTIONS

Time is running out to boost to your 2011 federal tax refund. All you have to do is make your January 2012 mortgage payment while it’s still December.

It’s a simple tax strategy that works because of how mortgage interest is paid, and of how the U.S. tax code is written.

Different from rent which is paid for the month ahead (i.e. “you’re paying January’s rent”), mortgage payments are made only after mortgage interest has accrued (i.e. “you’re paying for money you’ve already borrowed from the bank”).

This is called “paying interest in arrears” and U.S. tax code states that the mortgage interest is tax-deductible in its year paid, subject to limitations.

By making the January 2012 mortgage payment in December 2011, therefore, homeowners who itemize their on their tax returns can apply their January mortgage payment’s interest portion to their 2011′s tax returns.

The alternative is to pay the mortgage on schedule, and wait for April 15, 2013 to claim the credit.

If you choose to pre-pay your mortgage and typically send your payment via USPS, give your check ample time to be delivered to your lender, and processed. Mail your check no later than Saturday, December 24.

For coral springs homeowners that pay electronically, the process is simpler. Edit your online bill pay program to have your mortgage payment post no later than Thursday, December 29.

Make note, however. Not all mortgage interest is eligible for tax-deductibility, and not all homeowners throughout the state of florida who pay mortgage interest should itemize said interest on their tax returns.

Before prepaying on your mortgage, ask your tax professional for advice.

STAGING TIPS FOR YOUR REAL ESTATE SALE

10 Low Cost Ways to Make Your Home Buyers Say WOW!

These low cost strategies to make your home more appealing are sure to have your potential buyers saying WOW! Plus these tips are quick and easy.

1. Mow the lawn and trim the bushes – especially the ones that block your windows and diminish sunlight.
2. Purchase a new doormat.
3. Add a bright pot of flowers (or even a small evergreen in winter) on your front porch.
4. Replace any old, tarnished doorknobs on your doors and polish or replace your house numbers.
5. Power-wash your driveway, sidewalk, and the exterior siding of your home.
6. Edge the grass around walks and trees plus add fresh mulch to your planting beds.
7. Purchase a new mailbox.
8. Upgrade the outdoor lighting for a feeling of safety (yes, buyers drive by your home at night too) and to add dramatic effect.
9. Clean your gutters.
10. Place a seasonal wreath on your front door.

Home Selling Made Easier!

While there are many details to be handled during the sale of your home, from preparing your home for the market, pricing the property correctly, negotiating offers, inspections, and so on, you can breathe easier knowing every detail will be handled on your behalf to your complete satisfaction.Contact us, your real estate experts for more information about a complimentary pre-listing consultation today!

Request Your Complimentary Home Evaluation

While many real estate agents still use the old fashion “PFA” (Pulled From the Air) method to determine the fair market value of your home, we’ll remove all the guesswork when your home is evaluated.  Your home will be priced properly using current data to perform a Comparative Market Analysis (CMA). In the CMA, we’ll collect and compare data for homes that have recently sold in your neighborhood. This system will analyze homes that are comparable to yours in terms of house size, lot size, improvements, locations, and schools. Request your FREE Home Evaluation today!