This comes up for FHA deals when investors purchase properties and then “flip” them. I’ve seen quite a few flips in the Sacramento area over the past year (yes, even in this economy). I hope the information below proves helpful in case you are wondering when a second FHA appraisal is required during a flipping scenario. Verbatim from HUD:

FAQ : Is a 2nd appraisal only required under the Property Flipping Rule?

Solution Details : Under property flipping guidelines, a lender must obtain a second appraisal by another appraiser if:
1. the re-sale date of a property is between 91 and 180 days following the acquisition of the property by the seller, and
2. the resale price is 100 percent or more over the price paid by the seller when the property was acquired.

When a second appraisal is required

• It must be completed by a FHA Roster appraiser selected by the Direct Endorsement lender that is underwriting the loan.
• The cost of the second appraisal may not be charged to the borrower.
• The lender must not request a second case number in the FHA Connection for the purpose of obtaining the second appraisal and is to independently contact the appraiser.
• Only the information for one appraisal may be entered into the FHA Connection appraisal logging screens, which is the appraisal that is relied upon to determine the maximum loan amount.
• Copies of both the first and second appraisals must be included in the case binder submitted for insurance endorsement.

ML:09-48  Handbook 4155.2: 4.7, 4.7.f, 4.10.b-c

If you have questions or any appraisal needs, feel free to contact me at 916-595-3735 or ryan@LundquistCompany.com.

When I do appraisals for FHA loans, this situation comes up quite a bit, and my sense is there is confusion in the marketplace about this issue. When an FHA appraisal has been done in the name of one lender, but then the loan transfers to a new lender, does the new lender need to ask the appraiser to “reassign” the appraisal so that the appraisal is in the name of the new lender? Nope. See below.

Here is all you ever wanted to know – verbatim from FHA/HUD:

FAQ : When a case number is transferred with a completed appraisal, may a new appraisal be requested?

Solution Details : When a borrower has switched lenders, the 1st lender must transfer the case to the 2nd lender upon borrower request. FHA does not require that the client name on the appraisal be changed when it is transferred to another lender.

In accordance with USPAP, the lender is not permitted to request that the appraiser change the name of the client within the appraisal report unless it is a new appraisal assignment. The appraiser cannot ‘readdress’ (transfer) the original appraisal report to another party and must perform a new appraisal assignment in compliance with Advisory Opinion #26 and FAQ # 74 in the 2008-2009 edition of USPAP.

For cases assigned on or after January 1, 2010, a 2nd appraisal may be ordered by the 2nd lender when:
1. The 1st appraisal contains material deficiencies determined by the DE underwriter for the 2nd lender.
2. The appraiser performing the 1st appraisal is on the 2nd lender’s exclusionary list.
3. Failure of the 1st lender to provide a copy of the appraisal to the 2nd lender in a timely manner would cause a delay in closing, posing potential harm to the borrower. Potential harm includes events outside of the control of the borrower such as loss of interest rate lock, purchase contract deadline, foreclosure proceedings, and late fees.

For cases in 1 and 2 above, copies of both appraisals must be retained in the case binder. For cases in 3 above, the 1st appraisal must be added to the case binder when it is received.  In all cases, the lender must document why a 2nd appraisal was ordered and retain the explanation in the case binder.

FHA prohibits appraiser shopping where lenders order additional appraisals in an effort to assure the highest possible value for the property and/or the least amount of deficiencies and/or repairs are noted and required by the appraiser.

I hope this was helpful. If you have any questions, feel free to call me at 916-595-3735 or email ryan@LundquistCompany.com.

A local realtor named Jesse Garcia of Keller Williams Realty interviewed me last week and the video is live today. We talked about the real estate market in Sacramento, property values, property tax appeals, and Project 680. Jesse is a good guy and I feel honored for the opportunity to chat a bit in his “Information You can Use” blog series. You can view more videos in Jesse’s series on his YouTube channel or on The Sacramento Real Estate Tube. Anyway, check it out and let me know what you think.

I’m heading to an appraisal inspection shortly in Roseville and I wanted to share some preliminary research. I find it interesting to take a panoramic glimpse of citywide data like this. What do you see in these trend graphs below? What stands out to you? The graphs are based on all single family residential sales and listings in Roseville from Sacramento Metrolist. I’d love to hear your comments below.  

While on the subject of Roseville, I wanted to mention that one of my Twitter friends, Realtor Steve Ostrom of Coldwell Banker, posted an interesting video a couple of weeks ago about shadow inventory in Roseville and Rocklin. It’s interesting to look at what the numbers are saying. How many houses are in the process of foreclosure? How many loans have defaulted but not listed on the market yet? Statistics like this are very important to watch and they can be indicators of what is to come too. If you can’t see the video below, then click HERE.

I sighted something interesting the other day in a neighborhood in Rancho Cordova (next door to my house). There was a telephone pole leaning toward a single story house within fall distance. The photo almost looks “photoshopped”, but it’s not. Even if you failed geometry, it’s quite obvious that this pole is not at 90 degrees. 

If I was appraising this property, this would be something I would need to mention as a potential safety hazard, don’t you think? After all, most people think a “Flat Teresa” is not a great idea in real life. Lenders would want to know about something like this too (and they always ask about high power tension lines).

The real estate market has been hot lately for investors since prices and inventory have both come down so far. I get hits everyday on my website and blog from keywords and phrases such as “duplex bank-owned properties in Sacramento”, or “residential-income units”, or “quadruplex for sale Sacramento”. People are looking to buy and the competition has been fierce lately, hasn’t it?

I figured it might be helpful to provide a list of all duplex and fourplex units for sale in Sacramento County (under $200,000). This information is based on Sacramento Area MLS. Click on the following links to open a PDF file.

Duplexes in Sacramento County under $200K as of 01-15-2010 (pdf)
4-Plexes in Sacramento County under $200K as of 01-15-2010 (pdf)

If you have any questions about the 2-4 residential-income market in the Sacramento area, let me know. I’m familiar with the local market and I do a good amount of work for a handful of local and Bay Area investors. Also, if you see a property in the files above, and you need the Listing Agent’s phone number or other information, I’d be happy to get that to you. Give me a call at 916-595-3735 or email me at ryan@lundquistcompany.com.

Here is a brief podcast recap of the 2009 real estate market in general in the Greater Sacramento region. What will 2010 have in store for us? Do you think the market will surge, stabilize or decline? Do you feel like now is a good time to buy? Your comments are welcome below.

I’m wrapping up an appraisal report tonight for an investor in Carmichael. While crunching numbers and running data, I decided to do a little comparison of sales in Carmichael and Fair Oaks. So I graphed all detached single family residential sales (from MLS) over the past three years and came up with the following trend graph. I only included sales less than 1.5 million since there are a very limited number of properties above that level.

All sales over the past 36 months in Carmichael are listed below in blue and all sales in Fair Oaks are displayed in green.

It’s interesting to see an overall common trend for both Carmichael & Fair Oaks, though not ultimately surprising since the communities tend to overall have a somewhat similar appeal in the marketplace (though Fair Oaks has a slight edge as local Realtor Nate Sisam mentions below). Despite there being niches in both communities that may be superior to other areas, and a slightly higher median price level in Fair Oaks, it seems that the ups and downs of the real estate market over the past few years have been taken in stride for both of these communities. In fact, the median price level for Fair Oaks over the past year was only 2% higher than Carmichael during the first 6 months of the year, and 4% higher during the past two consecutive quarters. For reference, the latest unemployment rate in Carmichael as of November 2009 is 9.2%, whereas the unemployment rate in Fair Oak si 7.0%. The rate of unemployment in Sacramento County as a whole for November 2009 is 12.5%.

Sacramento Realtor Nate Sisam gives us further insight:

Fair Oaks and Carmichael are both established neighborhoods that offer people larger than overage lot sizes and diverse architecture. It has always been that Fair Oaks commanded a slightly higher price due to several key elements. Fair Oaks was one of the first established “Country communities” in the 20′s-40′s with a rich history in Olive and Citrus farming. Today that heritage is still evident when looking at property in Fair Oaks. Additionally the Fair Oaks Village brings the community together and adds to the charm of the area. From an accessibility standpoint Fair Oaks is slightly more freeway accessible. I would note that these communities are diverse and that pockets within each of them could be considered equal.

What do you think of the graph above? Does anything stand out to you? If you live or work in Carmichael or Fair Oaks, what do you enjoy about the community? If you had your choice to live in either of these areas, which would you choose? Comments are welcome below.

In 2010 the Sacramento Appraisal Blog will be offering a “podcast” tool through AudioBoo. This feature will enable audio market updates, interviews with local real estate agents, and discussions on other relevant topics. All audio entries will be posted in the “podcast“ tab above and also in a blog article too for the sake of discussion. Here is an introductory sample podcast for you.

This will be an exciting feature in 2010, and if you have any suggestions for topics, feel free to email me at ryan@lundquistcompany.com or call me at 916-595-3735. Additionally, if you have a differing podcast/audio blog tool to plug, I am open ears.

Thank you everyone for participating in the Sacramento Appraisal Blog’s first blog contest. The grand prize was a $125.00 Residential Natural Hazard & Tax Disclosure Report compliments of www.GeoAssurance.com. I appreciate all who entered by commenting on THIS blog post (or tweeting the post). Please see the 40 second video below to see who won. Thanks again everyone and thank you to GeoAssurance for being a great sport about supporting this contest and providing the prize!!!

I put together a series of city-wide graphs to show the past three years of home sales within Folsom, El Dorado Hills, Rancho Cordova & Citrus Heights. It’s always interesting to me to take a look at a market-wide graphs to try and make sense of what property values have done over a specified time period. When looking at data like this, I ask questions like: What is the lower end of the market doing? Have there been any changes in the upper end? What does the overall trend look like? Declining? Stabilizing after a decline? Increasing? What types of circumstances may have triggered a change in the overall price levels during various times over the past three years? New laws or regulations? Unemployment? Loan rates adjusting? Economic factors? Zoning?

All graphs below are based on information from Sacramento Metrolist between 08/28/2006 to 08/27/2009. The points on the graphs represent single family residential detached units.

Number of Sales in the Past 3 Years:

• Folsom:  2,183
• El Dorado Hills:  1,665
• Rancho Cordova:  1,732
• Citrus Heights:  2,374

What do you see? What does it look like the market has done in the areas below? Does anything stand out to you or surprise you? What do you notice about the higher end of the market on all of the graphs?

Folsom Real  Estate Market Trends: 

 El Dorado Hills Real Estate Market Trends

Rancho Cordova Real Estate Market Trends:

Citrus Heights Real Estate Market Trends:

City-wide data is important to look at because what is happening in the overall city can sometimes have an impact on smaller niches and portions of housing within the same city. This is not always true, but it’s relevant to at least be aware of what is happening in the overall market so that we can more readily decipher a city’s sub-markets.

On the other hand, one of the glaring downfalls of city-wide data is that information is too general to really draw neighborhood-specific conclusions from. As we all know, each city or area typically has a host of different types of neighborhoods, and these pockets of real estate can vary drastically from each other in terms of buyer perception, price range, and many other factors. For example, Rancho Cordova has two main zip codes and the 95742 zip code (Anatolia) is far different from most of the 95670 zip code (everything else). Or properties near Old Town Folsom may have weathered the market differently than those in Empire Ranch. Or Governor’s Village and Serrano in El Dorado Hills may show differing market trends because of location, square footage, year built, or some other factor.

With all that being said, I am very curious to hear your observations and insight about the city-wide trend graphs above. Feel free to comment above (just below the post title)  or email info@lundquistcompany.com. If you are in need of additional and more specific research or an appraisal, let’s talk soon (916-595-3735).

www.SacramentoAppraisalBlog.com Real Estate Market Trends: Past 36 Months of Sales in Folsom, El Dorado Hills, Rancho Cordova & Citrus Heights (August 2006 – August 2009)

The cities of Los Banos and Patterson are located in the Central Valley of California off of Interstate 5 in Merced County and Stanislaus County respectively. If you are not from the area, but you have traveled through California along I-5, chances are you have at least seen exit signs for both Patterson and Los Banos. I have appraised many properties in both cities over the past year and I figured I would throw up some quick and informative data as an FYI. The data below is based upon the past twelve months of sales in MLS for single family residential detached properties.  

City of Los Banos Real Estate Market Data: 08/28/08 – 08/28/09

• Last year the city of Los Banos in Merced County had 1555 sales
• 1379 of these sales were bank-owned properties (89%)
• 70 of these sales were short sales (4.5%)
• 93.5% of total sales in Los Banos were either bank-owned or short sales
• Los Banos has a 18.4% unemployment rate as of July 2009 (EDD)

City of Los Banos Links:

• Los Banos City Website
• Los Banos Enterprise (local paper)
• Community Website: Our Los Banos
• Los Banos Wikipedia Page
• Los Banos Chamber of Commerce

City of Patterson Real Estate Market Data: 08/28/08 – 08/28/09

• Last year the city of Patterson in Stanislaus County had 1108 sales
• 989 of these sales were bank-owned (89%)
• 83 of these sales were short sales (7.5%)
• 96.5% of total sales in Patterson were either bank-owned or short sales.
• Patterson has a 21.9% unemployment rate as of July 2009 (EDD)

City of Patterson Links:

• Patterson City Website
• Patterson Irrigator (local paper)
• Patterson Wikipedia page
• Patterson Centennial Website
• Patterson-Westley Chamber of Commerce
• Patterson Apricot Fiesta

What do you notice form the data above? Does anything stand out to you? Why do you think both of these communities have been plagued by foreclosures as well as a high unemployment rate? Feel free to share your thoughts by commenting above (just under the post title).

Please contact me at 916-595-3735 or info@lundquistcompany.com if you have any questions about the data above or a need for more detailed analysis or valuation.

www.SacramentoAppraisalBlog.com Quick Statistics: Los Banos & Patterson Sales in 2008-2009 – Foreclosures & Short Sales