Category — Resources

New unemployment stats are out for Sacramento County. The unemployment rate dropped from 11.4% to 10.5% from March to April 2012. This is a big drop for one month, so we’ll have to see what coming months yield to see if this is just a blip or not. Whatever the case, it’s nice to see the overall downward trend in unemployment over the past year. It’ll only mean good news for the housing market to keep seeing this number decline. Source: EDD.

Here is a graph of unemployment in Sacramento County since 1990 to give a panoramic view of the job market. It’s amazing to consider the history of where we’ve been (and maybe a bit depressing too).

Do you want to share these graphs? If you’d like to use these graphs on your blog or website to be a resource to your readers and clients, please do so. If you need a larger size for a presentation or newsletter (or your blog), let me know. Please see my sharing policy for details. As always, thank you for linking back to me and keeping my images intact. It’s a huge honor when others share my content.

What do you see above? Anything stand out to you?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook

What do you get when you have three appraisers appraise one house? It sounds like the start to a cheesy real estate joke, but unfortunately there’s nothing funny about this scenario.

A home owner hired me recently for some value perspective after there were three separate appraisals done on his house for sale. Since there was a huge discrepancy between the values and contract price also, the seller wanted to find out what his house was really worth. So he hired me to review the appraisals and talk with him about the market. And yes, I have permission to share this story.

Background: His house in the Sacramento area listed at $210,000 and had 7 offers right around $210,000 (conventional, FHA & VA), and a cash offer at $198,000.  Some offers asked for 1-3% concessions back to the buyer, but others did not. The first accepted offer was $210,000 and the second was $213,000.

Appraisal #1: This appraisal came in at $192,000. The appraiser made an adjustment for a declining market and a hefty adjustment downward for being located on a feeder street too. These adjustments essentially knocked off about $10,000 in value (and they weren’t supported in my opinion). All things considered, this appraisal looked low, especially in light of a pending sale the appraiser used in the report that subsequently closed at $195,000 (and was 200 square feet smaller with less upgrades – located on the same street).

Appraisal #2: After the first buyer moved on, a second buyer came along. The contract price was $213,000 and the appraisal came in right at contract. All things considered, it just seemed the appraiser was maybe reaching for the contract price on this one. Still, it’s amazing to see a $21,000 difference between the first two appraisals.

Appraisal #3: This was a review appraisal from the second buyer’s lender, and the value came in at $185,000. The reviewer did an exterior inspection of the property and the “comps” were simply not comparable. There is nothing similar about dirty distressed sales and the subject as a clean and upgraded home. Just because something has sold nearby does not mean it is a “comp”. This appraisal was good for nothing not the highest quality I’ve seen. The buyer was actually willing to pay the difference in cash between the contract price and a potentially lower appraised value, but the review coming back at $185,000 was a huge amount for the buyer to consider paying. This reviewer was probably paid very little for the job he did, yet his appraisal ended up playing a huge role in the transaction.

Any lessons we can learn? Situations like this aren’t pretty, but there are still some important take-aways to remember in this market:

1. Appraisers, do a better job.
2. Agents, be ready to answer questions and provide market insight to appraisers when they ask you questions about one of your sales or listings. In light of low inventory, it’s critical to obtain insight from real estate agents - especially on listings. Also, here are some tips for talking with appraisers in an HVCC world.
3. Borrowers and owners, if you’ve at the receiving end of a bad appraisal, ask the lender what their process is for doing an appraisal rebuttal or challenge, and then follow their guidelines. You may need to offer new comparable sales, market data or possibly obtain a new appraisal. If the lender is not willing to work with the new data, and you feel strongly the original appraisal is not accurate, you may need to switch lenders. Keep in mind the appraisal sticks with the property for 120 days if it is an FHA loan, but that’s not the case with a conventional loan. It may be worthwhile to consult with an appraiser who is a market specialist in your area also. The appraiser cannot advocate for your cause, but can provide unbiased market research for you. Here are some tips for how to challenge a low appraisal.
4. Let’s remember that market value and price are not always the same thing – even when inventory is low. Despite multiple offers, we won’t always see properties appraise at or above contract price.
5. This market is not easy for anyone to interpret, yet it’s easy to blame various parties for a deal not working out – particularly appraisers. In the case above, the shoddy appraisal work was clearly to blame, yet that’s not always the case when a transaction goes south. All I’m saying is let’s give blame where it is due and when it is due, but be objective in our critique.

Any questions, stories or insight? Why do you think there is such a difference in appraised value in situations like this? I’d love to hear your comments below.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook

If there is one conversation dominating real estate right now in Sacramento, it’s definitely the shortage of listings. It’s wild to think there is only about a one-month supply of inventory on the market. This means buyers have had to duke it out (not literally) to get into contract. Also, multiple offers and offers over asking have become much more common too.

But why is inventory low? Is it because of a coming “wave” of foreclosures or a “shadow” inventory? Do sellers have less confidence in the market? Do banks have something to do with it?

I talked with Eric Peterson of Praxis Capital about the issue of low inventory. Eric’s company pays very close attention to the market as they flip about 125 houses a year in the Greater Sacramento area. Watch the video below (or here).

What do you think? Anything else you’d add? Is there a looming shadow inventory? If you are an agent, buyer or seller, what’s it been like in the trenches for you lately?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook

I don’t read calculus books for kicks, but I do like numbers. It’s really interesting to watch the trends in our real estate market in Sacramento to consider where we’ve been, what is happening now and where we might go. Take a minute to check out these graphs below and let me know what you think. What do you see?

Not many houses for sale: We’ve seen a huge drop in housing supply in the Sacramento area. Check out the graph above of Sacramento, Placer, Yolo and El Dorado Counties. Source: Trendgraphix, Inc.

Sacramento vs. Placer County: It’s interesting to see Placer County and Sacramento County median sales prices juxtaposed. I’m particularly interested to see how the trend evolves in the next six months. There is a slight uptick evidenced as of late and the Sacramento Association of Realtors blog reported an increase in median sales price level in April also. Only time will tell to see how that further unfolds. This graph comes from Joel Wright of Wright Real Estate (used with permission).

The Unemployment Saga: How is unemployment doing in the Sacramento area? Here is a historical glimpse of unemployment in Sacramento County from January 1990 through March 2012. I keep a running graph each month like this. If you need a larger size for a presentation or your blog, let me know (just keep my blog URL in the graph and see my sharing policy). Data source: EDD.

Current Unemployment Trends: As of March 2012 the unemployment rate per EDD in Sacramento County is 11.4%, which is similar to the rate during June 2009. It’s been so nice to see a decline from the high of 13.2% in July 2010, but there has been a slight uptick lately as you can see above. Unemployment rates tend to fluctuate, so it’s understandable to see the rate experience a little increase during recent months, but we just need it to decline to see housing improve. Bottom line.

California vs. Sacramento: How does the Sacramento area stack up against price trends in the rest of California? This graph shows the median price in California compared to the Sacramento area. The graph comes from Joel Wright of Wright Real Estate (used with permission).

Distressed vs. Traditional Sales: The Calculated Risk blog has some pretty amazing content. Be careful when you visit though because you might get stuck there for a while. The graph above is used with permission and is taken from a post that deals with distressed vs. traditional sales in Sacramento. The blog post states, “In April 2012, 60.7% of all resales (single family homes and condos) were distressed sales. This was up from 59.6% last month, and down from 66.8% in April 2011. This is lower than the last few years, but 60% distressed is still extremely high!” This is right in line with what I’ve been saying all along too as I’m cautious about focusing on smaller bits of good news in light of the overall context of the local economy and housing market. Granted, there are some positive signs with low inventory, small price increases and distressed sales going down, but we have a long way to go. Read more with two recent posts ”Juggling short sales and foreclosures in Sacramento” and “Weighing the distressed market in Sacramento.” Click HERE for a larger image of graph above.

What stands out to you? I’d love to hear your comments below.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook

If you’ve been around real estate for even a short time, you likely know a thing or two about FHA loans and some of what appraisers look for during FHA appraisal inspections. Well, here are 10 things you might not know about FHA appraisal requirements:

1. Open up that Attic: If there is an attic, the appraiser is required to do a “head and shoulders” inspection of the attic – even if the attic access has been sealed off by the home owner. When that happens, the attic will have to be opened up again for the appraiser to safely be able to inspect the attic.
2. Zero Value: There is no such thing in the FHA world for a certain feature or structure on a property to be given “zero value”. For example, despite a buyer, seller and agents agreeing that the run-down garage is not included in the sale, that’s not the way the appraiser will look at it.
3. Hoarder Inspection: If the appraiser cannot see the floor or walls due to debris, the owner will have to clean things up so the appraiser can do a proper visual inspection of the property.
4. Drive-by Inspections: FHA requires full interior/exterior inspections. Exterior-only or “drive-by” appraisals are not allowed.
5. The Whole Enchilada: Every structure within the parcel lines has to meet FHA minimum property standards. This means if there is a barn with a defective paint surface or any other FHA issue readily observed, it’ll need to be addressed. FHA standards don’t just apply to the main house.
6. Graffiti Removal: FHA states graffiti on the house must be removed because it is a safety issue.
7. Old Comps: Appraisers cannot use comparable sales (“comps”) older than 12 months prior to the date of value. So if you share “comps” with an appraiser, they should be recent sales.
8. Pool Safety: Each county or city has specific requirements for pool safety, so FHA will bow to local authority on their standards for pool safety. There is no one universal standard for all states, so it’s all about local standards.
9. Direct Ordering: The lender can actually order FHA appraisals directly from the appraiser. FHA does not require the use of an AMC or third-party ordering system (made popular through HVCC). Keep in mind “lender” does not mean broker or loan officer, and most lenders opt to use a third-party system anyway.
10. Calling FHA: If you are in real estate, keep 800-CALL-FHA handy for any questions you have on FHA standards – especially as it pertains to a particular property you are dealing with. In my experience HUD has been extremely helpful and polite during countless conversations I’ve had with them.

I hope this was helpful to answer some of your questions. You can check out other FHA appraisal articles I’ve written, and definitely comment below if you’d like. Email or call with any questions.

Does anything above surprise you?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook

I mentioned a couple of weeks ago about a panel I was sitting on dealing with social media in the real estate field. This event was hosted by the Sacramento Social Media Club, and it took place a few days ago. Since the discussion was recorded live on Ustream, I wanted to share the conversation below (or click here).

The video is over an hour, so it’s really perfect to play in the background while you work, cook or exercise. Personally, that’s how I digest longer videos and podcasts since I’m short on time. I hope you enjoy the panel and maybe even pick up a few nuggets to use as you establish a strong online presence for your business. The conversation is focused on real estate, but the principles are really applicable to any business – not just real estate. Panelists include Heather Ostrom, Tamara Dorris, Laura Monroe and yours truly (moderated by Chris Little). Enjoy.

What stood out to you? Anything you’d like to add? Questions? Comments?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook

Did you wake up this morning with condominiums on your mind? Probably not, but I wanted to highlight a crash course video on some of the nuts and bolts of condo real estate transactions. This is really good stuff and I hope you find it helpful.

The video below highlights Realtor Bruce Slaton and it deals with some of the most common financing challenges and HOA issues that condominiums tend to face. It’s really an excellent quick intro to condominiums. The presentation was geared toward Realtors at the Sacramento Association of Realtors, but the information is still solid and relevant for others too. Bruce shares some interesting condo nuggets too that many may not be aware of. His presentation is about twenty minutes and begins at 5:07 and ends at 26:18. If you are pressed for time, just listen to the video in the background while you work. Watch below or here (video starts right at 5:07).

For more information you may wish to check out two previous articles I wrote entitled ”5 Potential Deal Killers for Condo Loans” and “What’s the difference between a condominium and townhome” (there is so much confusion about this).

What do you think of the video? Anything stand out to you?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook

Have you ever overpaid for something? None of us like to admit when we spend too much money on something, but occasionally it happens – whether it’s a hyped-up gadget, hot toy during Christmas or even a piece of real estate.

Overpayment Conversations: I get phone calls periodically from property owners who think they overpaid for a house or parcel. After all, purchasing real estate often involves a combination of logic and emotion, and it’s usually the emotion part that drives us to pay too much.

Scenario 1: Most home owners I speak with about overpayment tend to say they overpaid by $5,000 or so to get the deal done. Honestly, even if there was an overpayment of $5,000, that’s an extremely minimal tax savings (about $50) that probably isn’t worth the time to pursue. In truth, don’t waste your time. Moreover, when a sale was on MLS and exposed on the open market for a reasonable time period, and there were other sales at a very similar level, the overpayment argument doesn’t have much support.

Scenario 2: However, there are cases where owners really do overpay by quite a bit. This tends to happen more frequently with unique properties, parcels, custom homes and all cash private sales off MLS that are not subject to an appraisal or strict lending guidelines to evaluate risk. Sometimes buyers and investors will overpay by tens of thousands or even hundreds of thousands of dollars. It happens and there are huge tax consequences too (overpayment).

How long can you appeal your “base year” value? In the case of legitimate overpayment, there can be tax relief for the property owner, but the owner can only appeal the “base year” value within four years of the date of purchase. After four years, there is nothing the owner can do to correct the base year value. In California the “base-year” or “Proposition 13″ value is the assessment level the Assessor assigns to a property when it is first purchased. All other years of taxation are “based” on this original assessment, so it’s definitely an important number. For example, if you bought a property for $500,000, and the Assessor determined market value was indeed $500,000 at the time, then your property taxes should not exceed that level in the future beyond an allowable 2% increase for inflation each year. Of course if property values decline, then your property should receive a temporary “Prop 8″ assessed value where your assessment is temporarily lowered each year to reflect the current market instead of the $500,000 market in the past when you purchased.

Money leaving your wallet: All things considered, if a property owner overpaid by $100,000 and the Assessor did not catch the overpayment, the property owner would basically be overpaying by $1,000 each year. Imagine doing that for 25 years in a row (that would equal 25-30K in overpayment). That’s why it’s important to act within four years in case there was a significant overpayment. All you would need to do is fill out the proper appeal form and supply support for a lower opinion of value for the base year between July 2 to November 30 of the calendar year (if relevant, this is what I can help you with).

I hope this was helpful. Please let me know if you have any questions, stories or scenarios to share with me (in comments below or feel free to call or email me).

When have you seen people overpay in real estate or retail? Are there are specific retail examples you can think of?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook

There is so much talk about low appraisals, especially as the market has been heating up in the Sacramento area. The dramatic decrease in inventory over the past few months has really changed the market into a seller’s market with many scenarios of multiple offers and offers over asking price too. In light of limited recent sales, this means it’s all the more important for appraisers to get very specific information from real estate agents for their sales and listings. If you are a listing agent, be prepared to be able to answer the following questions when appraisers email or call you.

Questions to be prepared to answer for one of your listings:
- How many offers did you have on the property? Don’t just say “multiple”.
- What price levels were the other offers? Be specific if possible.
- Why was there a change in listing price? (if the price was lowered or raised)
- What attracted the buyer (and others) to the property?
- Why did you accept the particular offer instead of others?
- What have you noticed happening in the neighborhood market?
- What sales did you use to market the property? (opportunity to provide potential comps to the appraiser if he/she is appraising your listing)
- Were there any concessions in the purchase price? (money or anything provided to the buyer to help get the deal done).

Example information when an appraiser calls: “I had four offers on this one. 2 were over asking at $245,000 and the others were at $240,000. I stopped accepting back-up offers. The seller accepted the offer because the buyer seemed committed and able to perform. The seller also liked the buyer as a first-time buyer. The listing price was lowered 15K to get into contract immediately. I had about 50 calls on this property and probably 100 showings, so I know the price was really attractive. The bank was about to foreclose, so we needed an offer immediately. Buyers really liked the cul-de-sac, great room concept and “move-in” condition. The REOs in the neighborhood tend to sell for less since they often need new carpet and paint. Also, the school district boundaries change two streets over, so that was a selling point. Inventory is really low in the neighborhood, so this one really stood out – even as a short sale. All buyers asked for 3% in closing costs back, which is common.”

Does it bug you to talk to appraisers? This list might sound overwhelming or even annoying, but the questions are really aimed at understanding the way the market responded to your particular sale or listing. Most agents get this and do a great job, but sometimes a few agents give off a bothered vibe. Ultimately, keep in mind appraisers are simply trying to do their job, and talking to appraisers is a normative part of the real estate business. Specific information on current listings and pendings in particular helps appraisers gauge the current market – especially since there are sometimes few recent sales to use as comps. This means current listings are an important window into the market. Thankfully it’s easy to unpack answers to these types of questions in just a few sentences. Appraisers of course need to be the ones to ask the right questions, but if agents already generally know what appraisers might ask, that can only help.

We’re in this together. Thank you real estate agents for talking with appraisers. Thank you for returning phone calls and emails. Your insight is often valuable and it’s an essential step for appraisers to do their job (verify data and analyze the market).

I hope this was helpful. Let me know if you have any questions, stories or insight.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook

Why didn’t the appraiser take into consideration your custom switch plates, new baseboards, door knobs or fresh flowers in the garden? Sometimes I hear from home owners, real estate agents and loan officers about things like this.

Let me first say that there are three options to consider: 1) The appraiser missed the items in the final value; 2) The appraiser didn’t really think the items made a difference for the final value; 3) The appraiser considered the items in the final opinion of value, but didn’t make an adjustment for each item in the appraisal itself.

An example of switch plate covers: Do switch plate covers make a difference in value? Let’s look at two different switch plates from Lowes below. The nylon plate on the left costs $0.39 and the satin nickel plate on the right costs $6.54. If a house has 20 spaces for switch plates, the cheap nylon plates would cost $7.80 total, whereas the more expensive satin nickel plates would cost $130.80. The difference between the two types of plates is $123.00.

Does this mean your property is worth $123.00 more? Theoretically, if the market shows that a buyer is willing to pay $123.00 more for your house with satin nickel plates instead of a house with nylon plates, then the appraiser should consider the value impact. But realistically, appraisers aren’t going to focus on that type of nitty-gritty data (it would be nearly impossible to track down anyway), but the appraiser will often consider small ticket items like this in the final reconciliation of value. This means if your house is fairly similar to the comparable sales used in the report, but you do have quite a few extra features like more expensive switch plates, upgraded hardware, new baseboards, updated ceiling fans, new light fixtures, etc… the appraiser can take all these things into consideration during the final reconciliation of value and potentially reconcile your value to a higher end of the range instead of the lowest end of the range (if that’s what your many small improvements warrant of course). If you think that sounds crazy, let me ask you this. Have you ever made an offer on a house for $123.00 more because of switch plates?

Give the Appraiser a List of Updates: It’s helpful to the appraiser when the owner or agent writes out an itemized list of all recent improvements – whether big or small. Include costs too if you have them so the appraiser knows your bathroom remodel was $15,000 instead of $2,000. Basically, let the appraiser know about any way you’ve put money into your house – even switch plates.

What if the appraiser really did miss things that impact value? If you do feel the appraiser missed value in your report and you plan to challenge the low appraised value, then it’s time to pick apart the appraisal and send in some thoughts to ask the appraiser to take a second look and reconsider your points. But don’t bring up small things like switch plates and baseboards when you do this. Focus on the big-ticket items that are really going to sway value. Focus on the following:

Discuss any more relevant comps that the appraiser did not use.
- This is one of the strongest points you can make to help the appraiser reconsider the market.

Focus on comp selection, adjustments and items that impact value: 
- Did the appraiser use sales similar to the subject in condition?
- Is there a difference in the level of upgrades between the subject and comps?
- Are the neighborhood boundaries correct?
- Is there any big difference between the reported square footage or bed/bath count in the appraisal report in comparison to what you know to be accurate about the subject property?
- Is there a value difference between distressed and traditional sales in the neighborhood?
- Are there any major location differences unaddressed? Busy street? Next to gas station?
- Are current listings similar in price level to recent sales? Listings can often show us the direction of the market (up or down).

I hope this was helpful. Please let me know if you have any questions, insight or stories to share. I always welcome comments below as well as emails.

Do you have custom switch plates?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook

I’ll be sitting on a panel at an upcoming event called “Social Media and the Future of Real Estate”. I’d love for you to come check it out on May 8 at SAR HQ at 6:30pm. If you cannot make it in person, the event will stream live on Ustream or you can follow it on Twitter with the hashtag #SMCSAC. But let’s face it, it would be nice to meet up in person. The Sacramento Social Media Club describes the event as follows:

Social Media is a Real Estate Game Changer– How do you create a meaningful social media balance?

Social media and the internet have transformed the way real estate professionals connect with their community. Many have embraced it and some are struggling or resisting the inevitable. Throw in facebook, Twitter, YouTube, Google+, Pinterest and a vast amount of growing networks and it can be downright overwhelming!

Presented by Social Media Club Sacramento, a panel of Real Estate professionals who have had success with social media will discuss social media best practices, how to balance your professional with your personal brand and how social media impacts real estate today.

Panelists include: 

Heather Ostrom, Realtor®, Coldwell Banker Sun Ridge, @RosevilleRockLn
Ryan Lundquist, Appraiser, Lundquist Appraisal Company, @SacAppraiser
Tamara Dorris, Realtor®, Davis & Davis, @tamaradorris
Laura Monroe, Virtual Assistant, Creative Agent Solutions, @LauraMonroe

Moderator: Chris Little, Real Estate Broker and President Elect of Sacramento Association of Realtors, Little Real Estate Services, @Chris_Little

For more information check out the Eventbrite page and the Facebook event page. Let me know if you have any questions. I hope to see you there.

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook

I’ve written before about how to prepare for an appraisal inspection, but I wanted to revisit the topic from the other side today. Here are 10 things NOT to do when the appraiser comes over.

1. Walk around the house in your birthday suit.
2. Let the dogs run loose to lick and bite the appraiser at will.
3. Lock your doors so the appraiser doesn’t have access to each room.
4. Watch ”adult” movies (this actually happened once…. yikes).
5. Let the appraiser surprise sleeping house guests. Rise and shine.
6. Make things as messy as possible.
7. Refuse to discuss any recent updates to your home.
8. Follow the appraiser around as much as possible.
9. Buy lavish gifts in hopes of boosting value.
10. Don’t make a list of recent improvements.

You know I’m only having fun, and I’m pretty sure you can sift through what I’m saying to understand a bit more how to be ready when an appraiser comes to inspect your property. If not, please read “What should you do before the appraiser comes?” If you have any questions, let me know.

Anything you’d add to the list?

If you have any questions or Sacramento area real estate appraisal or property tax appeal needs, contact me by phone 916-595-3735, email, Twitter, subscribe to posts by email or “like” my page on Facebook