Category — Resources

It’s a huge honor when people share my posts, videos and photos on their blogs and websites. It’s actually something I encourage and welcome too if it’ll benefit another blog audience. But I do want to take a minute to communicate clearly on my policy for sharing content online from the Sacramento Appraisal Blog so we’re on the same page and can share happily ever after. Here are six simple requests:

1. Graphs: Feel free to share my graphs (unaltered). Please link back to my blog.
2. Videos: Feel free to share my videos (unaltered). Please link back to my blog.
3. Photos: Share any of my photos (unaltered). Please give credit / a link back.
4. Posts: Share snippets of posts (unaltered), but I’d appreciate my posts not being shared in their entirety on your blog or website. It’s always nice to see someone share a paragraph of my thoughts, insert their own commentary and then link to the rest of the article. This seems like a great social media policy to me. Why? Because you share something valuable created here to benefit your audience, but your readers also still have a reason to visit my site too instead of just yours. This helps sharing be good for you and me.
5. Similar Use: Share any media above or other files on your blog or website in the same way I use them – not a different way. This helps keep the integrity of the media intact. If you have any idea for usage in another way, contact me.
6. Other: If you have questions, let me know. I am reachable and always willing to talk with media, bloggers and real estate (and other) professionals. I’m all about being a resource to you and your readers.

Again, thank you for sharing my content. It means a great deal to me when others think my stuff is good enough for their audience. As we share posts, my hope is to be able to maximally create value together. Know that I will always give you proper credit and links, and work hard to honor your content.

Any questions? Do you have a similar policy? Anything you’d add or change?

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

Anytime I hear hyper-positive news about the national housing market, I wonder if it’s spin I always sift the details through the local economy in Sacramento and the need to see the unemployment rate continue to drop to see improvement in our market. It’s been somewhat encouraging to see the unemployment rate decline from the high of 13.2% in July 2010 to 11.2% in February 2012, but I’ll feel even better once we see unemployment down a few more percentage points. I’ve been posting unemployment trends and graphs for quite some time, but the graph below stands out in my mind since I added an additional eight years (1990-1998) from my previous graphs. It’s amazing to consider what a wild ride it’s been over the course of two decades. The economy and unemployment have been up and down to say the least (sort of like a roller coaster), and hopefully we’ll have a downhill ride in coming years to get that rate down a bit.

Feel free to use this image on your blog, website or in a presentation. I do have a larger size available too, so email me if that’s relevant for you. Please just keep the image intact and feel free to link back.

What stands out to you about the graph? What time period do you remember most?

Property Tax Class This Week: By the way, on an unrelated note, on Thursday I am teaching a class at the Sacramento Association of Realtors YPC forum called “How to Appeal Your Property Taxes.” The class is open to SAR members and affiliates, but even if you are not a part of the association, you can come as my guest. Just let me know beforehand if you’re interested (send me an email, call or comment below). I’ll be talking about the nuts and bolts of property tax appeals, FAQs and advice for consumers from my experience consulting with home owners.

YPC Forum: “How to Appeal Your Property Taxes” – April 19, 2012 9am Sacramento Association of Realtors 2003 Howe Avenue, Sacramento, CA 95825

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

Let’s talk about sliding glass doors for a minute. I wanted to bring up two repair issues I see frequently during FHA appraisal inspections in the Sacramento area. I notice these issues in not only foreclosure sales, but also investor flips. Why does this matter? FHA is very specific about a property needing to meet certain requirements, so having a home in “FHA shape” before it lists on the market will help eliminate re-inspection fees by the appraiser, which effectively removes one more potential delay in closing escrow.

Broken Glass: One of the things you hear constantly about FHA loans is the importance of “health and safety.” So we must ask the question: Could it be a safety issue if there is one pane of glass broken on the sliding glass door with shards of glass sticking out? The answer seems obvious, right? This could be a safety risk for occupants – particularly children. The seller will need to cure the problem by removing the shards altogether or ideally replacing the glass pane. It’s actually easy to miss things like this, so it’s important to look closely at a sliding glass door.

Broken Locks: In addition to a focus on “heath and safety”, the basic concept of meeting FHA minimum requirements is that everything must work as it is designed to work. For example, a window that is supposed to open must open, and a built-in appliance should do what that appliance is designed to do. This means if you have a sliding glass door that is supposed to lock, it should do just that. If the seller is putting a 2×4 in the sliding glass door track to keep the door shut, that’s not okay. In the case below, the lock is missing altogether, so a new working lock will need to be installed before the close of escrow.

I hope this was helpful to answer some of your questions. You can check out other FHA appraisal articles I’ve written including Top 10 Repair Issues for FHA Loans and Do the Appliances Have to be Working for an FHA loan?

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, Facebook, Twitter or subscribe to posts by email.

Sometimes I get a stack of “comps” from real estate agents during my appraisal inspections when meeting the agent at the property. Are they good ones? Sometimes they are, but since many times they aren’t, I wanted to highlight some important questions that might be useful to Sacramento area agents (and anyone) when selecting sales to share with the appraiser. I hope this is helpful.

Here are five questions to ask yourself before giving comps to an appraiser:

1. Is the “comp” a replacement? Would buyers in the neighborhood market consider purchasing the “comps” instead of the subject property if the comps were still on the market? That’s really what “comparable” means. The sale should be similar enough that the buyer would have theoretically considered it as a replacement instead of the subject property. If the subject is a fixer, are the comps fixers? Do the comps have standard updates also or are they all remodeled?
2. Are your comps located in the same neighborhood? Keep the neighborhood boundaries in mind when selecting comps by asking yourself where else a buyer would shop for a similar property. It’s fine if there is a reason to use comps outside of the immediate neighborhood, but just make sure the neighborhood is really competitive to the subject neighborhood (not superior). Otherwise the sales really aren’t all that similar.
3. Are the sales of a somewhat similar size? It seems like I get “comps” from agents quite a bit that are incredibly different from the subject property in size. For example, if the subject is 1700 square feet, I wouldn’t be surprised to see sales around 2300 square feet show up in the stack of comps. This is fine of course if the market views these properties in a similar way or there is an extreme shortage of sales, but usually there’s a price premium for the extra living area. Does a buyer looking for a 1700 square foot house typically shop for a 2300 square foot house at the same time? Probably not in most cases.
4. Are the sales recent? If the appraisal is for a loan, most lenders want to see recent sales over the past 90 days. However, if there is a good reason to use older sales, the appraiser certainly isn’t bound to use sales only from the past quarter if they are indeed the best sales. Sometimes real estate agents will give “comps” that are 6-12 months old while ignoring more recent sales though, and that’s suspicious if there are solid recent sales.
5. What are your motives? I think it’s fine for real estate agents to share data for the sake of giving the appraiser insight into how they marketed the property. It’s great if the comps and commentary help answer the question as to which properties the agent used to market the listing. Ultimately agents want to advocate for the sales price, which is fine in the eyes of their clients, but at the same time agents can often say and do things that pressure the appraiser to “hit the number” – which is not fine. When advocacy for a client becomes coercion for the appraiser to meet a certain value, that’s not a good thing. That’s why it’s important to check motives and use language in a way that does not pressure for a higher value. Check out a previous post on talking to appraisers (things to say and not say) for helpful tips.

Sacramento area Realtor Steve Ostrom and I discussed this issue of giving comps to appraisers in a video below (or click here).

How do you communicate with appraisers? What things do you say and not say? Do you have any frustrations, tips or questions?

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

After completing two appraisals in the past 10 days for buyers for all cash transactions, I wanted to throw down some thought about getting an appraisal when paying all cash in the Sacramento area. I think there is a time to do that and also a time to not do an appraisal. This isn’t legal advice, but here is my opinion:

Get an Appraisal during a Cash Purchase:

1. If you feel like you’re overpaying (or your client is overpaying).
2. If you think an appraisal can be used as a bargaining chip to lower the price.
3. If the seller will not budge on the price and says, “show me an appraisal”. I’ve seen investors and owner-occupant buyers lower their purchase price by providing a credible appraisal to the seller. I had an investor client this year able to lower the price on two fire-burned houses by getting an appraisal.
4. If your funding source wants to see something in writing.
5. If you plan to rehab the house through NSP or another program, get an appraisal since it’s probably required already (I just finished an NSP appraisal yesterday).
6. If you are an out-of-town buyer, make sure you’re not overpaying. Investors from the Bay Area and out-of-state do tend to overpay because they are less familiar with the market. Moreover, when investors are coming from areas with higher values, lower prices can seem incredibly attractive, which only breeds an environment for overpaying. But even the two appraisals I did recently with all cash local buyers were overpaying (see last paragraph).

Don’t Get an Appraisal during a Cash Purchase:

1. If it’s painfully obvious you’re price is fair (just be sure).
2. If you specialize in the neighborhood and know prices and values like the back of your hand, why bother?
3. If the price is just a bit high, but it’ll kill the deal if you walk, it still might be worth it to go through with the purchase so long as the investment pencils out. That’s a very subjective point of course and everyone must ask how much they are willing to overpay for something.

Multiple Offers and Overpaying: I have noticed buyers tending to make offers higher than the sales price right now to get into contract. Since there has been a much lower inventory in the Sacramento area it seems like listings are hoarded by potential buyers. A byproduct of fewer listings has been buyers offering more than the contract price to beat out their competition and get into contract. All things considered, if paying cash, there is a risk of overpaying in a climate like this. I would simply say to be cautious and consider getting an appraisal if you think the number isn’t quite feeling right. The two houses I appraised recently in situations like this were in contract 10-15K too high.

Have you ever had an appraisal during an all cash situation? Why? Why not? What points or tips would you add to the lists above?

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

It’s often believed that appraisers need to use comparable sales only within a one-mile radius. But that’s not really accurate or a good methodology for valuing a property either. Appraisers should really use competitive sales located in the neighborhood or a similar neighborhood – regardless of whether they are located within one mile or not. Besides, has there ever been a neighborhood in the shape of a one-mile radius anyway? That would be interesting.

The Danger of a One-Mile Radius: Take the following image for example in the northern portion of Oak Park in the Sacramento area. If I were to search for comparable sales within a one-mile radius of the red dot below, a return of sales from all sorts of neighborhoods would come back. Portions of Med Center, Elmhurst, Curtis Park, West Tahoe Park, Midtown and East Sacramento really don’t compare well with the location of the house (red dot) despite being within one mile. This example shows very clearly how inaccurate it can be to simply use a radius to measure a real estate market.

Lender’s One-Mile Guideline: It’s true that most lenders have guidelines wanting appraisers to stay within a one-mile radius, but there is actually no official “one-mile rule” from Fannie Mae that appraisers have to follow. Of course, in a tract neighborhood with ample sales, there probably isn’t a good reason to use comps outside of one mile anyway, so that’s why lenders issue their own guidelines to say appraisers need to stay within one mile. But the appraiser can definitely travel outside of one mile if need be. Check out the video below (or here) on Fannie Mae’s guidelines for distance in appraisal reports:

Which comps should the appraiser use? Ultimately appraisers should utilize sales in competitive neighborhoods – whether those are inside or outside of a one-mile radius. Where would a typical buyer consider making a purchase instead of the subject property? That’s a critical question to ask when defining the boundaries of a neighborhood. In the case above, it would be highly important to stay as close as possible to the red dot in the photo, and not cross the freeway either because a typical buyer looking in Oak Park would not simultaneously be looking in Curtis Park, Elmhurst or other portions of Tahoe Park due to price differences. By the way, New York appraiser Jonathan Miller has an outstanding post entitled “What is a Comp?”

Why does this matter?

1. Appraisers: Appraisers need to select the best comps in their reports.
2. Not Bound: It’s important for everyone to know that unique properties, major fixers, historic homes, rural homes and oddballs are not bound by a one-mile radius.
3. Resale Value: Sellers and investors need to understand the neighborhood and how appraisers are going to view the subject neighborhood too in order to gauge resale value. Be careful not to base your price on a superior tract nearby outside of your neighborhood boundaries. Check out a post on the importance of knowing your neighborhood boundaries.
4. Giving Comps to Appraisers: When agents give ”comps” to appraisers while at an inspection, it’s best to give properties that are actually located in the same neighborhood or at least deemed competitive in a similar neighborhood (as opposed to nearby sales that meet a certain price level). Moreover, the “comp” should really be similar enough that the buyer would have theoretically considered it as a replacement instead of the subject property. I had an agent give me “comps” recently and one sale was located 7 miles away from the subject property. While the subject property is a bit on the unique side in a standard subdivision, the sale 7 miles away was in a totally different and superior market – and therefore not similar at all.
5. Zillow and Online Sites: Zillow has value for what it is, but doesn’t always understand the importance of tight neighborhood boundaries. See a previous post on Zillow and comparison to actual appraisals.

Any thoughts?

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

When will you hear back from the Assessor? It could be a matter of months, but ultimately it can take up to two years. The County of Sacramento states “The time limit for the Assessment Appeals Board to act on an application is two years from the date of filing.” In my experience it seems The Appeals Board typically gets back to owners within a year, but sometimes longer and others times only a matter of months.

Do you still have to pay your property tax bill at the higher level during an appeal? Unfortunately yes. This is often frustrating for home owners, but it’s the way the system works. Verbatim from the Assessor’s Office, “You must pay the original bill timely to avoid penalties, pending the outcome of the review or appeal.” Keep in mind Sacramento County will issue you a refund from your overpayment if your property taxes get lowered through the appeals process.

How long does it take Sacramento County to issue a refund after a successful appeal? Your refund should come within 95 business days. Don’t expect to be the exception either. You’ll get between $100-125 back for every $10,000 in property reduction. If you were overassessed by $50,000, for example, you would get $500-625 back in your pockets. From the Assessor’s website:

All offices involved in the property tax process (Assessor, Auditor-Controller and Tax Collector) are experiencing a historically large volume of these reductions. When the Assessor’s Office determines a reduction in assessed value is appropriate, a roll change is processed and certified to the Auditor-Controller, typically within 15 business days. The Auditor-Controller will issue a corrected tax bill within 20 business days and deliver it to the Tax Collector for further processing. If a refund of paid money from the original bill is required, it is normally issued within 60 business days after the corrected tax bill has been calculated. You should anticipate the assessment changes will take up to the full 95 business days to be processed.

Is it still worth it to appeal despite having to wait? You have to answer that question for yourself. I think if there is money to save, it’s absolutely worth it in my opinion, and the appeals process is the only way to obtain a reduced value (unless the Assessor reduces your property value automatically due to their own research). It may be frustrating to wait, but the alternative is to overpay taxes. I have successfully appealed my property’s taxes three times and I always enjoy getting a refund to check to keep my hard-earned money in my pocket. If I have to wait a while to get money returned to me, I can live with it.

I hope this was helpful. Let me know if you have any questions, check out other articles on property taxes and visit my property tax appeal website for additional information.

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

Here is a glimpse of the unemployment rate in Sacramento County over the past 10+ years from 1999-2012. We’ve seen the rate drop from the peak of 13.2% in July 2010, and lately the county is flirting with unemployment around 11.0%. The most recent rate statistics for January 2012 from EDD shows an unemployment rate at 11.1% in Sacramento County.

What stands out to you about the graph?

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

How do you know if you’re overbuilding? Here are ten signs for your mental checklist if you’re considering a significant addition to the size of your home.

You are overbuilding…

1. If your house is going to be twice as large as all others in the neighborhood.
2. If you no longer need Neighborhood Watch because your house towers over all others and is a watchtower in and of itself.
3. If you have double the bedrooms of other homes in the neighborhood.
4. If your house is mistaken for a motel or residential care facility.
5. If you can see in every backyard on the street.
6. If what you are building will yield little value in the resale market.
7. If the larger size removes the rear yard and thus creates a negative for buyers.
8. If prospective buyers think “Yikes, what were they thinking?” or “I would not want to live next to THAT house.”
9. If shade from your house lowers energy bills for neighbors on every side.
10. If buyers don’t have the expectation for such a large house in the neighborhood.

Obviously some of the points are only for fun, but you get the gist. If what you are doing is not consistent with the look and feel of the neighborhood as well as the expectations of the marketplace, then you’re probably overimproving your property. Watch a fun 30-second clip below of an overbuilt house I saw in Sacramento (and here is another in Woodland).

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, Facebook, Twitter or subscribe to posts by email.

It seems like most of us in the real estate community are on the same page that a property built before 1978 with a defective paint surface will require repairs for an FHA loan. We know lead-base paint was used in the United States before 1978, so there is a health and safety risk present when the paint surface is defective. This makes sense and it’s pretty much common knowledge.

What about after 1978? But what about a property built after 1978 that has a defective paint surface (chipping, peeling or flaking paint)? There is much confusion in the market on this point among lenders, real estate agents, home owners and even appraisers. Does FHA require repairs for a defective paint surface for a house built in 1979, 1993, 2005 or anytime after 1978? The answer is YES, but not because there a “health and safety” issue due to the potential for lead-base paint. The issue here is promoting economic longevity for the property since bare wood can lead to decay, which does not promote the longterm health of the property.

FHA’s latest Valuation FAQ on 2-28-12 (click here for PDF link):

Noted lead based paint still seems to be an issue that is unclear in the minds of some appraisers and lenders. Should the lender automatically call for painting only if the home is pre-1978, or should further measures be taken in all cases?

Page 6 of Appendix D in Handbook 4150.2 states, “For any home built prior to 1978, check for evidence of defective paint surfaces, including: peeling, scaling or chipping paint. For all FHA insured properties, correction is required to all defective paint surfaces in or on structures and/or property improvements built before January 1, 1978 in accordance with 24 CFR Part 35.” The appraiser is further instructed to provide a detailed description and identify the exact location of any deficiency under “physical deficiencies” affecting livability. The appraiser is required to condition the appraisal on the “repair” of any noted lead based paint deficiencies.

As noted in mortgagee letter 2005-48, defective exterior paint surfaces in homes constructed post-1978 where the finish is otherwise unprotected will require automatic repair.

Here is a video I did in 2010 on this very issue of pre-1978 vs post-1978. Watch below or here.

I hope this was helpful to answer some of your questions. You can check out other FHA appraisal articles I’ve written including not leaving paint chips on the ground when curing the defective paint surface and even potential options for handling the cost of the defective paint surface.

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

Have you ever felt like you need to do a blog post, but you just don’t know what to write? I’ve been there many times, so I wanted to share a resource I created that helps me avoid this feeling by keeping 10-20 post ideas in front of me at any given time. The document below hangs in my office, and I use it to jot down post ideas whenever I have them. This system is simple and it’s  worked extremely well for me to be more organized, save time and stay focused on my target audience.

Download “How to develop blog content” and start writing down some ideas. I hope this is helpful, whether you have a real estate blog or write about something else.

By the way, if you’re in the real estate industry and looking for some general blogging tips, check out Quick Tips for Real Estate Blogging.

How do you plan posts? Could you see yourself using a resource like this?

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

I caught up with Sacramento Realtor Chris Little recently and asked him to share a few thoughts on what is going on in the real estate market. In the video interview below (or here) Chris talks about prices, affordability, low inventory and other facets of real estate. Chris knows the market well and he’s been a huge advocate for progress in the Sacramento area too.

Chris Little was appointed to the American River Parkway Advisory Committee in 2007 by the Sacramento County Board of Supervisors, and was also appointed to the 65th Street Redevelopment Advisory Committee in 2008. He received the Civic Affairs Award from the Sacramento Association of Realtors for community service, and he has been a Director through the Sacramento Association of Realtors since 2009 (and he’s the current 2012 President-Elect). I mention these things because community service is extremely important to me, and Chris is a great example. Catch up with Chris Little at 916-698-1961, www.ChrisLittleSells.com or Twitter.

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