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Tripping on driveways and FHA loans

By 11 Comments

Can a cracked or raised driveway be an issue for an FHA loan? If the damage is deemed a safety issue for whatever reason, then it is something that will require correction. However, if the damage is minimal and hardly noticeable, it shouldn’t be a big deal. Let’s look at a real life example.  

The tree roots in this front yard in Sacramento have made a very obvious impact to the driveway. It’s not hard to miss damage like this, right? The photo above does give the illusion that the raised driveway is truck-sized, but my shoe below helps show more clearly that one slab has been pushed 3-4 inches higher than the other slab. It’s always important to bring in an object to the photo to help give perspective (maybe a ruler, quarter, dollar, etc… or shoe).

A trip hazard is a subjective call to make by the appraiser and not necessarily an automatic repair, but in this case above my sense is that this is a legitimate safety issue. There is confusion over trip hazards due to HUD Mortgagee Letter 2005- ML-48 (pdf) which indicates that trip hazards are no longer an automatic repair. Sometimes this is interpreted to mean that trip hazards are no longer an issue to be called out, but that’s not really the intent of FHA because guidelines require a property to be free of all known hazards and adverse conditions that might affect the health and safety of occupants.

Do you think a driveway as such might be a safety hazard? Have you encountered difficulties funding a loan due to a driveway like this?

If you have any real estate appraisal, consulting, or property tax appeal needs in the Greater Sacramento Region, contact me at 916.595.3735, by email, on our appraiser website or via Facebook. 

Excuse me, but what do you mean by “Anatolia”?

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Since the Anatolia area of Rancho Cordova is located four miles south of Highway 50 in a more secluded portion of the city, all the neighborhoods in that area are often referred to as “Anatolia”. There are actually currently three distinct communities in this area though and only one of them is under the Anatolia HOA. You can see the HOA outlined in red below and also the Sunridge Park and Kavala Ranch neighborhoods nearby – both not a part of the HOA (yet identified as such at times). 

It’s important in real estate to understand neighborhood boundaries since buyers might be attracted to certain neighborhoods for a variety of reasons. Some buyers might prefer the Anatolia HOA, the clubhouse and slightly older houses (2005+), while other buyers might be attracted to new construction in Kavala Ranch or Sunridge Park (over 50% of sales last year were new construction). As you can see in the graph below, Anatolia has the highest and lowest sales in the 95742 market, while Kavala Ranch and Sunridge Park seem to fit nicely in the middle of the range of sales in Anatolia. 

Can you think of any other neighborhoods in the Sacramento area that are lumped together under one title despite being distinct communities? If you live in the Anatolia area, what drew you to the community? Regardless of where you live, do you prefer an HOA or no HOA?

If you have any real estate appraisal, consulting, or property tax appeal needs in the Greater Sacramento Region, contact me at 916.595.3735, by email, on our appraiser website or via Facebook. 

Apartments going condo in Carmichael

By 4 Comments

The “Parkview Condos” were converted from apartments in 2005, and I thought it would be interesting to sneak a peek into the history of the development. These units located at 7032 Fair Oaks Blvd in Carmichael went on sale near near the very top of the market and have basically taken a pretty steep decline downward since (this is common to the Sacramento area since August 2005 of course).

Some key points about the Parkview Condos:

  • There are 43 units in the Parkview Condos
  • The size of some units are recorded incorrectly. The 1046 model is actually closer to 950 square feet. This could make a difference in market value and a tax assessment, don’t you think?
  • This complex is NOT on the FHA approved condominium project list
  • As of this week, the HOA says 40% of the units have an off-site address (this often means these units are rentals)
  • All sales and listings this year appear to be overassessed between $138,000 to $165,000 despite sales between $60,000 to $80,000.
  • There is a townhouse subdivision next door called “Parkview Townhomes”. There is a big difference between a condominium and townhouse, so sales in these two neighboring subdivisions really shouldn’t be compared. However, it’s nice to juxtapose each complex because the sales may still influence the immediate market (I just won’t use townhouse sales in a condo appraisal report though, for example).

Is there anything you’d be cautious of when purchasing a property like this? What other apartment complexes in the Sacramento area have you seen get converted?

If you have any real estate appraisal, consulting, or property tax appeal needs in the Greater Sacramento Region, contact me at 916.595.3735, by email, on our appraiser website or via Facebook. 

Do garage conversions add value?

By 7 Comments

A garage conversion is a quick way to increase the size of a house, but does it add to the overall value of a property? Here are five reasons why garage conversions tend to not help increase market value in the Sacramento area:

  1. No permits:  The conversion was done without permits (illegal).
  2. Not typical:  Garage conversions are not common in the neighborhood.
  3. Low Quality:  A partition and carpet in the garage really isn’t a very high-grade conversion, is it?
  4. No Storage:  Removing storage in a garage is not a plus in the eyes of most buyers. If there is no garage, where are you going to keep your bikes, tools, unused exercise equipment and holiday decorations? If a conversion is done properly, it may be appealing to buyers, but any increase in value may be offset by the negative of no longer having storage space. 
  5. It doesn’t feel like the rest of the house:  A converted garage often does not feel like the rest of the house because it still has the feel of a garage (despite sheetrock, a heat source, floor covering, windows). A converted garage is often on a lower foundation and it still contains the water heater and washer/dryer too. If some of the living area doesn’t conform with the rest of the house because it is lower in quality, the market will likely not give that portion as much value. This means the extra 400 square feet in the converted garage is usually not regarded the same way as an addition on the back of the house. Applying this point means a 1400 square foot house with a 400 square foot converted garage is probably not seen the same way in the market as an 1800 square foot house with no conversion.

What does this mean for home owners and buyers? You may not get the most bang for your buck in the resale market when converting a garage. If your conversion is done in a professional workmanlike manner though, maybe you’ll come out mostly even (this depends heavily on the quality of conversion and acceptance of conversions in your neighborhood). Ultimately, without regard to market value, if you need more space, converting a garage is a fairly inexpensive way to make that happen. Just keep in mind your future plans to sell the property and how your particular conversion might be perceived in your real estate market (and how much it might cost in case you need to turn it back into a garage).  

Any points you’d like to add? Would you convert your garage? Why or why not?

If you have any real estate appraisal, consulting, or property tax appeal needs in the Greater Sacramento Region, contact me at 916.595.3735, by email, on our appraiser website or via Facebook.