I’ve been seeing more new construction lately in the Sacramento area, particularly in Elk Grove. Have you seen the same thing? Where? I’ve noticed pockets of subdivision building on Bradshaw Road as well as near Bruceville Road & Elk Grove Blvd. Additionally, there are also occasional custom homes built on vacant lots like the one pictured below in the Camden Passage neighborhood. I snapped a “before” and “after” picture of this site while doing appraisal work in the neighborhood over the past six or so months. For the record, I’m a huge fan of “before and after” shots. See “No longer half-built in Oak Park“, “Flat vs. Hipped Roof” and “Heavenly Stairway” for a few examples. I love to see change over time.

It’s great to see some positive signs in the real estate market, don’t you think?

By the way, this property shown above is located on Allister Way in Elk Grove and is currently listed for sale by real estate agent Jacque McBurney 916-417-3344. It’s 2701 square feet & 4 beds and 3 baths (front and rear landscaping w/ a patio too).

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.

Newer tract markets usually have ample sales, but how does an appraiser establish value in a neighborhood with no recent sales? There isn’t a quick answer, but here are some of the things I do as a Sacramento area appraiser.

1. Older Sales: I look at sales over the past 1-3 years in the immediate neighborhood. While it’s ideal to have model match sales within a 90-day time period, that’s rarely possible with more unique neighborhoods with tight market boundaries. It therefore becomes important to use older sales in an appraisal report and then make an adjustment to the sales price depending on whether the market has declined or appreciated in value over time. For example, I might use a sale that is twelve months old in a unique neighborhood and then give a 15% adjustment downward after figuring out the market has declined by 15%. Methodology like this becomes important for appraisals along the Sacramento River, more custom homes in Camden Passage West in Elk Grove, or even sometimes in areas like Curtis Park, Land Park or Midtown depending on the property. Of course if the appraisal is for lending purposes, the lender will likely want to see some newer sales in addition to older ones.
2. Competitive Neighborhoods: If there are no real comps over recent months in the immediate neighborhood, I find competitive neighborhoods for comparison and then use recent sales in those neighborhoods. It’s important to ask the question, “where else would a buyer for this neighborhood shop for a house?” and then look for comparable sales in those neighborhoods. These competitive tracts will likely be outside of a typical one-mile radius, which is okay. This can work well when appraising in places like Little Pocket or Country Club Estates where I might have to cross a freeway or major street to find adequate comparables (I try not to do that though where possible). However, some neighborhoods are very distinct, which makes it more challenging to really find a competitive neighborhood. Take the Woodlake neighborhood in Sacramento, for example. This neighborhood resembles Land Park, yet is located nearly five miles away and is surrounded on all sides by properties with signficantly lower values. There is really nothing comparable to Woodlake in the entire 95815 zip code, so sticking with historical sales to a certain degree seems more reliable to me than picking sales from 5-10 miles away. Even Gold River is a good example of a distinct community. When appraising in Gold River I do not ever use comps outside of Gold River because it really is its own community.
3. Current Listings: I talk with real estate agents who have current listings in the immediate neighborhood to see if I might glean some insight into how the market is seeing the neighborhood. While listings are not sales, they are able to tell us something about the market and are important for consideration.
4. Recent Withdrawn Listings: I run a search of recent withdrawn sales in the immediate neighborhood and then talk with the real estate agents involved. Why did the property not sell? That question usually gleans some insight into how buyers perceive the neighborhood.
5. Other: I talk with appraiser friends, real estate agents, create historical graphs, consider other metrics, rental value, and poke around online to see what I can find too.

I’d be curious to hear more from real estate agents, home owners and appraisers. Why do you think there might not be any comps for the appraiser to use? If you have any insight or a point to add to the discussion, feel free to comment 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, Facebook, Twitter or subscribe to posts by email.

I’ll be taking the week off from blogging and all social media. I love sharing life and doing so much business online, but I think being intentional about unplugging is good and necessary on so many levels. Can you relate? But before I sign off for the week, I wanted to say Happy Thanksgiving from my family to yours. No matter what your circumstances might be this time of year, may you know a deep sense of contentment and have joy in your heart. I look forward to connecting after Thanksgiving, and I cannot tell you how grateful I am for all who stop by the Sacramento Appraisal Blog. Thank you!!!

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

Do you remember how hot the market felt when the first-time homebuyer tax credit hit the streets? If you recall, the tax credit went into effect from November 7, 2009 to April 30, 2010 (but then the deadline was extended to September 30, 2010 – but you had to be in contract by 4/30/10).

I just finished up an appraisal in North Highlands and I know the market really well in this particular neighborhood. I’ve been doing appraisals consistently over the past few years in a particular tract for an investor, so I’ve watched the market decline, seemingly stabilize during the tax credit season, and then decline again. The image below includes all of North Highlands as an example of the impact the tax credit appears to have had. There was an uptick in sales and the decline in property value seemed to stop while the credit was alive.

Now that the credit has been expired for over a year, how would you say it impacted the real estate market? Do you see this trend below in other neighborhoods or maybe just in markets under $200,000? What were the positives and negatives of the credit?

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

“Community Building” often feels like a buzzword, but when neighbors get intentional and begin to act on behalf of their community, it’s really powerful. Have you ever experienced that? How so?

While it might feel normal to be isolated from neighbors these days, a community is really only as strong and deep as its communication. Isolation simply does not work well for neighborhoods over the long haul no matter what the economics and demographics are for a community. This doesn’t mean we all need to be extraverted best friends, but only that a lack of communication will increase the likelihood of neighborhood decay.

This is very real to me because I believe philosophically in the ideas mentioned above, and I am also a practitioner. Last Saturday I was able to partner with residents in my neighborhood to plan a clean-up for a stretch of county-owned land near Light Rail tracks. There were 25 or so neighbors, and in just a few short hours we built a fence and spruced up a patch of land that needed some loving. The result? This cleaned-up site can now be a catalyst for pride, and is a small win for neighborhood residents, the surrounding community and even property values.

What do you think sometimes hinders residents from working together to deal with neighborhood issues?

Community Building 101: In case it might be helpful, I wrote a series called “Community Building 101″ a few years ago. If you are tinkering with the idea of how to begin to improve your neighborhood, this short mini-essay series might be relevant. Let me now what you think. Download HERE (pdf).

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

Just because a model match sells at a certain level does not necessarily mean it’s a good comp, right? Obviously model match sales are great for comparison because they have the same layout, but there are so many factors  why model matches do not always sell at a similar level. This point is particularly evident in the graph below of all MODEL MATCH sales in the Lincoln Crossing neighborhood. Isn’t it amazing to see nearly a 25% difference in price level for the same floor plan?

Here are my observations:

1. There is a vast range of prices among model match sales.
2. The neighborhood has seen a decline in value over time.
3. The range of sales is about $85,000. This range has been seen more or less over the past few years, which is important to note.
4. The sales at the top tend to back the greenbelt and have premium upgrades, while the ones at the bottom tend to be short sales. In this neighborhood short sales are tending to sell for less than foreclosures (for this model anyway).
5. The appraiser could botch the value if simply using model match short sales as “comps” while ignoring traditional sales at the top. At the same time, there could be money left on the table if the property is marketed against the lowest sales in the neighborhood. Also, the home owner could use all the wrong comps in a tax appeal too, right? This brings up the importance of working with local professionals and sifting through bank-owned, short sales and traditional sales to establish market value.
6. Having such a large range of sales means it may prove challenging for online valuation websites like Zillow and Cyberhomes to render a credible value. Granted, a reliable value is not always easy for human appraisers either to be fair, but actually seeing the property and understanding the market makes all the difference.

What stands out to you about the graph? What scenarios have you seen cause a huge difference in price among model match sales?

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

I was interviewed recently by Sacramento Area Realtor Doug Reynolds. This was a one-take video where we discussed the accuracy of Zillow, which has been a hot topic on this blog over the past year. Since Doug has clients asking about Zillow all the time and wondering if they can really rely on Zillow, he wanted to see what I think about Zillow as a real estate appraiser. For reference, here is the Zestimate accuracy table I mentioned in the video. Lastly, I also gave some tips for hiring a local appraiser. Thank you so much, Doug. Enjoy.

What do you think? Any questions or insight?

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

Home owners call me sometimes wondering why their property tax bill has increased over the past few years despite property values clearly declining. Has this ever happened to you? Take the real life situation below as an example. Is it suspect to have a higher tax bill in 2011 than in 2003 since property values clearly having declined in the Sacramento area?

Here’s the deal. If your property is currently assessed for less than true market value, the Assessor can increase your assessed value by 2% per year even if property values are declining (so long as the assessment does not go above the Prop 13 value of course). This can be very frustrating for a home owner, but it’s legitimate in many cases. Keep in mind though that the tax bill includes property taxes, but also direct levies, benefit assessments, and delinquent utilities, which could also be a reason why a tax bill has increased by more than 2%.

On the other hand, sometimes home owners don’t pay attention and this type of normative 2% yearly increase is occurring when in fact there should be a huge decrease due to the downward real estate market. For example, I am working with a Folsom owner who has seen an increase in property taxes over the past three years, yet values in the neighborhood have plummeted to the point where the house is overassessed by $150,000 (yet assessed value is going up each year).

Moral of the story: Pay attention to your property taxes and market value. An increase may or may not be legitimate based on your situation. Know your circumstances and watch closely. If you would like for me to look into your situation to see if there might be a discrepancy between your assessed value and market value, give me a call at 916-595-3735. The deadline to dispute property taxes in Sacramento County is November 30, 2011.

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

The definition of value in an appraisal report matters greatly. Most appraisals geared toward loans for Fannie Mae will use a typical Fannie Mae definition for market value. But this definition for value is not used in appraisals for other purposes. Let’s take a quick look below.

Fannie Mae Definition: Market value is the most probable price which a property should bring in a competitive and open market under all conditions requisite to a fair sale, the buyer and seller, each acting prudently, knowledgeably and assuming the price is not affected by undue stimulus. Implicit in this definition is the consummation of a sale as of a specified date and the passing of title from seller to buyer under conditions whereby: (1) buyer and seller are typically motivated; (2) both parties are well informed or well advised, and each acting in what he considers his own best interest; (3) a reasonable time is allowed for exposure in the open market; (4) payment is made in terms of cash in U.S. dollars or in terms of financial arrangements comparable thereto; and (5) the price represents the normal consideration for the property sold unaffected by special or creative financing or sales concessions granted by anyone associated with the sale.

What other definitions exist? As an example, I have one client who wants an established value for a 45-day sale. Or in other words, what is the value today based on properties having sold in only 45 days? This value is really a  “quick sale” value to help them sell off their foreclosure inventory – not market value as defined by Fannie Mae. Or I have another client that wants to get an idea of what a 90-day value would be in the future. Or in other words, how much would this property sell for in 90 days from now (theoretically)? Additionally, other clients want a retrospective value, which is a value based on a date in the past. This type of value is often used for ”date of death appraisals” and used in most estate settlement situations.

Did you know the IRS has their own definition of fair market value? This definition should be used in estate settlement appraisals since the end-user of the report is the IRS. These types of appraisals are ordered for tax purposes.

IRS Definition: Fair market value (FMV) is the price that property would sell for on the open market. It is the price that would be agreed on between a willing buyer and a willing seller, with neither being required to act, and both having reasonable knowledge of the relevant facts. IRS Publication 561

What’s the big deal? I bring this up because the definition of value will impact the appraised value. For example, if a normal marketing period is 60 or 90 days, but a client is requesting a 45-day value, the appraised value will likely be less than market value to speed up the sales process, right? Ultimately, it’s important for the appraiser and client to be able to agree upon the definition of value and understand what is being asked of the appraiser. The definition of value will ultimately guide what the appraiser is really looking for.

This is a no-brainer when it comes to doing typical loan appraisals because the Fannie Mae definition will likely be used, but in other private appraisal situations it is something that needs to be figured out (maybe for divorce or estate settlement). Home owners really shouldn’t worry about technical terms or finding the appropriate value definition though because any competent appraiser should be able to understand what the home owner is looking for after asking the right questions.

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

Yesterday I took part in a big community event and I wanted to share with you the great joy of the results. After all the planning and networking for the Project 680 Foot Drive, I am very pleased to say we collected 2,706 pairs of new socks for homeless students in the Folsom Cordova Unified School District (FCUSD). The tally for financial contributions has not been calculated yet, and the number of socks will only rise in coming days too as donations trickle in (just like 150 pairs came in since I took a picture of the calculator app below).

This is great news for me to start the day and I am so pleased how the community came together to rally around a cause as basic as collecting new socks for homeless students. You can check out the Project 680 website or Facebook page for details and read some really great stories about community members making this happen.

We cannot easily solve some of the bigger problems we face in society, but when we put our hand to the plow we can often do small things to make a dent in real local issues. This is exactly what happened last night and this is often how change begins.

Have a wonderful day of life and business.

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

Are you a visual learner? I am. Today I want to show you how to export data from MLS to make a great visual presentation. This can come in very handy for real estate agents and appraisers when comparing different segments of data in a specific neighborhood, city or county. You might consider doing something like this to display a difference in bedroom count, price vs. square foot range, distressed vs. typical sales or even something like pool vs. no pool. In the video example below I show you how to plot Arms-length vs. REO vs. Short Sales in a neighborhood (like this graph in Elk Grove). I hope it’s easy to understand. Enjoy and let me know if you need any clarification. Happy graphing!!

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.

This is a great example of what happens when a home owner purchases a property, the real estate market has a major shift, and the home owner does not pay attention to property taxes. This is a real scenario and unfortunately it’s all too common.

I just finished a tax appeal report for a home owner in Fair Oaks. His property is assessed at $281,873 and has been assessed at that level for the past three years. He originally purchased the property in 2003 for $292,000. All things considered, after a detailed analysis, market value on January 1 was actually $150,000, which is $130,000 less than the assessed value. This means the owner was scheduled to overpay by $1,648 this year (he easily overpaid these past two years also by $2,500).

Life is full and there are so many things to stay on top of, so it’s understandable to not pay attention to property taxes. However, think in terms of the exodus of greenbacks from your wallet that should be staying comfortable in your pocket. This home owner easily overpaid $2,500 over the past two years and was scheduled to overpay another $1,648 this year had he not contacted me. How does giving the county $4,000 of YOUR money sound to you?

Remember the deadline to dispute property taxes in Sacramento County is November 30, 2011. Contact me and I’ll be glad to explain how the process works and take a preliminary free look into your property to give a professional eye to your situation. By the way, you can look up your property HERE to see how the county has assesed you (your value should be based on January 1). The tax appeal world often feels like foreign territory for many home owners, so let me at least give you insight into what to do and how to do it. I typically charge $99 for a very solid appeal report that includes multiple trend graphs of your neighborhood, a market analysis, the best comps and the worst comps too if need be. You should only hire me or someone like me if there is a savings to be had though. Don’t waste your money on a report that is not needed. Whatever you do, pay attention.

If you have any questions, or real estate appraisal or property tax appeal needs in the Greater Sacramento Region, contact Lundquist Appraisal by phone 916-595-3735, email, Facebook, Twitter or subscribe to posts by email.