Posts from — November 2009

Do you remember several years ago in the Sacramento area when duplexes were selling for $400,000-$500,000+ like it was nothing? Well, the housing bubble burst and the residential-income market came crashing down along with everything else.

The graph below displays all sales in Sacramento County for duplex properties. I know, Sacramento County is an enormous territory, but sometimes viewing large ares helps to see an overall trend.

What do you notice when looking at all duplex sales in Sacramento county? It seems the bulk of sales are well under $300,000, and that the median sales price level easily lost $200,000 or more over the past three years. Ouch. There certainly are an enormous portion of sales between $100,000 to $200,000 too, aren’t there? 

Let’s take a closer look at a specific area in Sacramento by viewing sales in North Sacramento in the 95815 and 95838 zip codes. No, that’s not a ski slope, but a trend graph of all duplex sales.

It’s interesting to see what looks like two markets at hand above: One market below $100,000 and another market hovering between $150,000-$175,000. Market segmentation (bifurcation) is common depending on condition, location, size, or even the nature of the sale – short sale vs foreclosure vs typical arms-length transaction.

One more. What’s happened in the city of Rancho Cordova’s duplex market over the past thirty six months? No surprises. It looks similar to the graphs above.

When it comes to duplexes in Rancho Cordova and surrounding areas of Sacramento, the majority of recent sales are reo properties (bank-owned). For example, in a recent duplex appraisal I just completed in a Sacramento neighborhood, 84% of all duplex sales over the past 12 months within this neighborhood were REO sales and 10% of all sales were Short Sales. It’s not an easy market when 94% of all sales carry some level of distress.

Contact me at 916-595-3735 or ryan@lundquistcompany.com if you have any questions.

www.SacramentoAppraisalBlog.com The Bursting of the Duplex Market in Sacramento

This is a great cause I plan to participate in. I became aware of the Christmas CanTree drive through Jeff Dominguez of Exit Realty West (Jeff is definitely one of the good guys) and the Sacramento Association of Realtors.

Per the Sacramento Association of Realtor’s website:

What CanTree Does
The food donated will be distributed to needy families through The Salvation Army’s Holiday Food Basket Program. Over 45,000 local families are expected to benefit from the food contributed through CanTree, according to The Salvation Army. The Army currently serves 36,000 meals per month in the Greater Sacramento Area. CanTree is a critical factor in successfully feeding thousands of people at Christmas time.

Why SAR Sponsors CanTree
Every REALTOR® knows that a healthy community is crucial to our success. All the money we raise for CanTree goes directly to the Salvation Army – none of it goes for administration or any other costs. Even though the real estate market has seen better days, enthusiasm is still very high and REALTORS® are as generous as ever.

Let me know if you have any questions and I’ll do my best to answer them. You are welcome to contact Exit Realty West at 916-441-4418 for more information on their potluck / auction.

www.SacramentoAppraisalBlog.com Christmas CanTree Project 2009: Event by Exit Realty West in Sacramento

I wanted everyone to know that I’ll be putting up some posts on HousingStorm.com. This is a great opportunity and I plan to have some fun with it.  You can check out my posts HERE.

HousingStorm.com was designed to give a unified platform and voice to those of us who believe that you, our clients deserve real un-spun facts and the honest real estate truth. It’s your money. It’s your house. You deserve to work with someone who actually understands the complexities and nuances of this market.

All of our writers have been fully-vetted and proven their desire to keep their clients informed. They have comprehensive knowledge of their towns and neighborhoods. They see the bigger economic picture and grasp the impact that global events will have on their local real estate market. They believe that a successful business is built on being completely honest with you, their clients.

www.SacramentoAppraisalBlog.com My Posts on Housing Storm

It was six months ago on May 1, 2009 when the Home Valuation Code of Conduct was implemented. We all know there has been controversy and complaints galore when it comes to HVCC, and so it’s no wonder there weren’t any “Happy Sixth Month” birthday parties. Or did I miss the local HVCC celebration somehow?

Communication is a bit different now in the real estate world due to HVCC, and so this entry is designed to help foster more effective connections between Realtors and appraisers in a post-05/01/09 market. Yes, Realtors can still talk with appraisers and provide ample information about the real estate market or properties they have sold or listed. The only thing Realtors and agents cannot do is coerce or influence appraisers toward an opinion of value.

Below are some basic suggestions for things to say and not say to an appraiser during an inspection. My hope is that these tips will be very practical and useful for the field.

Tips for talking to Appraisers during an inspection:

• Be conversational. Make a great impression on appraisers.
• Be on time. If you are late, say sorry.
• Helpful statements: “I’m glad to help out where I can.” “Let me know if you have any questions about the property or neighborhood.” “Call me if you need anything.”
• Drop in some comments about the local market, supply and demand, bifurcation, new listings, REOs, price per square foot, or anything relevant you can pull out of your bag of tricks. This might help conversation emerge as well as a mutual market education too.  
• If you want, bring a list of potential comps and say, “Would you like to see any recent sales I pulled in the neighborhood?” This way you leave it up to the appraiser to accept anything from you (no pressure), and you are not even labeling these properties as comparable in any sense either, but only saying “have a look if you’d like”. A method like this might be particularly useful if you sense on the phone that the appraiser may not be in touch with the local market for whatever reason.
• Give a verbal or written list of all upgrades and repairs made.
• If it’s ethical for you to do so, consider letting appraisers know how many offers, showings and calls your listing had. This type of information is often useful. Please be honest and careful not to steer a value conclusion with this information.
• Ask appraisers for any local market insight they might have, and feel free to share your understanding also. Both Realtors and appraisers have expertise when it comes to the real estate market, so sharing knowledge is a tremendous benefit for both groups. For example, if you are aware of upcoming new construction, a thriving neighborhood association, employment trends, eminent domain issues, a school opening or closing, or other aspects of real estate in the immediate neighborhood, that could be resourceful information to discuss. 

Things NOT to say to an Appraiser during an inspection:

• Don’t complain about HVCC. If it comes up, that’s fine, but there are more productive things to talk about (see above).
• Don’t rant about another appraiser who “destroyed your last deal”. Talking about another appraiser like he/she is some sort of village idiot does not leave a good impression.
• “Here are the best comps for you to use in your appraisal report” (this sounds like you are influencing an opinion of value).
• “Is this one going to come in at value?” ”Is it going to appraise for at least the sales price?” ”Do your best to get the value as high as possible”. You definitely want to steer clear of value-pressuring questions or statements.

If you have any other suggestions to help appraisers and real estate agents communicate more effectively and ethically in an HVCC world, feel free to leave a comment or contact me at 916-595-3735 or ryan@lundquistcompany.com. It would be great to hear stories too of your interactions with appraisers or agents. You can comment by clicking “Continue Reading” below.

www.SacramentoAppraisalBlog.com Talking to Appraisers in an HVCC World: Tips for Real Estate Agents

Somebody asked me the following question the other day and I figured I’d post a response here.

Q: Could a location near a water tower impact market value for a home?

A: Maybe. Sometimes water towers are quite large and the typical buyer may not want to live right next to the tower. Let’s face it, some buyers simply wouldn’t want to look at an enormous tower every day, so they’d steer clear of such a location. If this was the case and most buyers felt that way, then there could be an impact on market value. On the other hand, there may be other buyers who would be unaffected by a water tower, or evidence to suggest that such a location makes no difference at all.

There is not a hard-and-fast water tower rule for appraisers to follow. There is no specific “water tower adjustment” that appraisers make in reports. An adjustment in an appraisal report would really depend on what data in the specific market was saying. Any adjustment should be based on the reaction in the marketplace. Is there any evidence in the market that buyers are willing to pay less  or more based on the location of a water tower? How do the most recent sales surrounding the water tower compare with sales further away? Does data show that there is really little to no impact on value?

Market conditions certainly play into the equation here too. If there is a vast oversupply of properties listed in the market, chances are someone might look to other listings first that maybe had a more typical view. However, in a market with very limited available properties, buyers may feel less concerned about such an issue and not consider a view of a water tower as a negative. After all, in a hot market with few properties to choose from, buyers tend to more easily overlook locational challenges (busy street, backs to commercial, located next to major fixer…) and even condition issues.

I don’t mean to be frustrating, but there is not really a straightforward end-all answer to the question that was posed to me. The answer really depends on your specific real estate market and what data in your local market says. My knee-jerk reaction is that most buyers would probably prefer to not live next to a water tower, but then again, it really comes down to what the data says because sometimes a real estate market is surprising and things that we think would make a difference in value don’t carry as much weight as we think (or none).

If you have any firsthand experience with a property near or next to a water tower, I’d be curious to hear what you have to say. Have you ever intentionally purchased a property near a water tower or away from one? Did you purchase a property near a water tower only to regret it later on? Is it just not a big deal for you at all? Feel free to comment.

www.SacramentoAppraisalBlog.com Question: Could a location near a water tower impact market value for a home?

Last night I walked through my neighborhood with two Jedi knights. Yes, my boys both dressed as Obi-Wan Kenobi for Halloween, and their light sabers protected my family as we trudged through the streets of our tract, visiting with neighbors, and of course collecting and passing out candy. 

Halloween can be a fun and bonding time for a community, but when it comes to trends I see in society, I’ll admit I feel concerned that traditional trick-or-treating is seeming to be outsourced to other local venues instead of experienced in the local neighborhood.

It’s become very popular in recent years for families to enjoy Halloween outside of a neighborhood setting. For one reason or another, people will travel to a big Halloween event at the local mall, enjoy a “Harvest Festival” at a church down the street, or find something else to do on the evening of the 31st besides spending time in the neighborhood. 

Don’t get me wrong. I’m not saying households should feel ashamed for leaving the neighborhood for one night. There is absolutely a place for a Halloween party elsewhere, a dinner with friends, and other fun and festive events. All I’m saying is it’s worth reflection to consider the outcome of the dynamic we’re seeing – residents being less involved in neighborhood life and kids going elsewhere to celebrate Halloween.

When we begin to replace traditional neighborhood events with other things outside of the neighborhood, or we get too busy or un-inspired to participate in community life, our neighborhoods begin to suffer. A sense of community in a neighborhood is about all the little things – waving to residents, talking to neighbors, watching out for crime, and even things like passing out candy. 

What do you think it would do for your community if more residents kept their lights on and passed out candy next year? Why do you think third-party Halloween events hosted outside of the neighborhood have become so popular in the past few decades? Feel free to share your thoughts.

www.SacramentoAppraisalBlog.com Trick-or-Treating, Staying Home, and the Value of a Neighborhood