Thanks to Sonja for tipping me off to this story. What type of problems might exist when a home is not connected to the sewer line for twenty three years? Might this impact marketability? Any health issues? Watch the video here to listen to a story from a Stanislaus County home owner (City of Ripon).

Let me close with a statement from the news story: “The problem has been repaired, but the sudden absence of regular “fertilization” may keep his lawn from looking so lush.”

If you have any real estate appraisal, valuation consulting, or property tax appeal needs, contact me at 916.595.3735, www.LundquistCompany.com or via Facebook.

We hear so often about how new construction has basically stopped in the Sacramento area. Instead of just listening to a blanket statement though, let’s take a look at the actual trend of building permits in Sacramento County from 1994 through 2010. The information below is based on data from the United States Census Bureau for the number of permits pulled for new construction of single family residential properties in Sacramento County.

What do you see? Does anything surprise you? What happened between 2004 and 2005 to chop the level of permits in half? Do you think more or less permits will be issued in 2011? Do you pay attention to the number of permits pulled as an economic indicator?

If you have any real estate appraisal, valuation consulting, or property tax appeal needs, contact me at 916.595.3735, www.LundquistCompany.com or via Facebook.

I saw this photo in MLS a while back while doing research for an appraisal in Stockton. Yes, this is an installed toilet in the crawl space of a residential single family home. The photo was labeled “non-permitted toilet installation”. They say a picture is worth a thousands words, and that just might be true in this case. What do you think? I’d love to hear your comments.

If you have any questions, let me know. Call 916.595.3735, email me, or find me on Facebook or my appraisal website at www.LundquistCompany.com. 

There is much discussion these days about “low” appraisals and even “Appraisal Hell”. Sure enough, these issues showed up again yesterday in an article on Reuters entitled ”Special Report: What’s a home worth? Pick a number, any number“. I wanted to give a few comments about this article as well as some reasons why homes sometimes appraise for less than the agreed upon price between a buyer and seller. My two cents:

1) Price is too high:  Sometimes the agreed-upon price on a home is too high. If one buyer and seller agree to accept a certain amount for a property, the agreed upon price is not always consistent with market value. There is a real difference between price and market value because market value would gauge what a typical buyer would pay for a property, not just what one specific buyer is willing to pay. As appraiser Patrick Egger says, if you lined up 100 buyers to purchase a particular home, what would the majority of these buyers pay for the specific property? The answer to this question would probably produce a pretty good number for what the home is worth. But you might have a small pool of buyers who would be willing to pay far above asking price, right? Maybe it’s a “honey, buy this house at any cost” situation, friends or family live next door, or simply a high offer is presented to beat out all other offers. 

2) Really bad appraisal:  Let’s face it, there has been some very warranted scrutiny of the appraisal industry over the years, and especially since May 2009 when HVCC was implemented. Maybe the appraisal really was bad (inexperienced appraiser, out of the area appraiser, really quick shoddy appraisal, appraiser didn’t know the market and just guessed at value).  You know appraisals are an issue too when phrases like ”Appraisal Hell” are coined to describe that place where Borrowers go when appraisal issues hold them back from getting a loan. However, it’s important to keep in mind that a “low” appraisal isn’t always due to a bad appraisal for reasons explained in this post.

3) Strict Lending Guidelines:  The article above gives a scenario where a couple paid for seven appraisals with different lenders before deciding to call it quits (because the appraisals did not come in high enough for their loan). My heart goes out to the couple for all the money they spent, but part of me wonders if there is more to the story. I wonder why the two appraisals at asking price were deemed suspicious by two different lenders. That’s a red flag in my mind, or maybe it’s just a testimony to hyper-regulation and lenders being finicky. But maybe the appraisals looked inflated for some reason too? Guidelines in lending have certainly become more strict in recent years, especially after the housing bubble burst.

4) Counter-offer to “No Man’s Land”:  Sellers sometimes counter the buyer with a higher price despite the buyer offering at asking price. At times this counter offer works out very well, but other times it might push the property into “no man’s land” (above market value). Many experienced local real estate agents are careful about this scenario as they work with their clients. In these instances, if the appraisal “comes in low” (below the higher accepted contract price), the value might not really be low, but rather indicative of where the sales price should have been. Of course sometimes properties are marketed at lower prices in order to get multiple offers quickly, and it’s not too surprising to see that market value ends up being above the original list price in many of these cases. Ultimately, it’s nice to be able to boost up the sales price and try to fit concessions or credits in a higher sales prices, but sometimes there might not always be room to do that.

In the past few months I’ve been hired multiple times due to bad appraisals. Usually a client or local real estate agent will ask me to do a full appraisal to help give the buyer a better sense of the market (this is usually when buyer’s are coming in with a more sizable down-payment than 3.5% – FHA). Other times clients will hire me as a consultant or reviewer (no value rendered) to take a look at the original appraisal they disagree with. My job in these scenarios is to  review the report and point out some things for the original appraiser to consider.

What do you think? What has been your experience with appraisals? What is your remedy to deal with a “low” appraisal?

If you have any questions or a need for an appraisal or consulting in the Sacramento area, give me a call at 916.595.3735, send me an email, catch me on Facebook, or see my company website at www.LundquistCompany.com.

I came across this street in Sacramento last week and shot a quick video. Which house do you think might be overbuilt for the area? Does one stand out to you? The answer is obvious, I know, because one house is defnitely 2x or more the size of surrounding houses.

What disadvantages or advantages might an overbuilt house have? I’d love to hear your comments and stories below.

Let me know if you have any questions. Call 916.595.3735, email me, or contact me through my appraisal website.

This is a graph I put together that places all sales in a particular community in California against the Assessor’s land value for a specific property. The goal of this research was to display the overall trend for property value in a particular neighborhood through the Fall of 2008 (red line), while simultaneously viewing the Assessor’s land value (black squares). This one graph is not the end-all solution to convince the Assessor to lower assessed value for this property, but coupled with some other data and comparable properties, the graph serves its purpose well.

Do property value trends and land trends seem out of sync? Why did the Assessor persist to increase land value over time through 2008 despite an obvious turn downward in property value?  

This is an example of some of the appraisal consulting work I do. At times I am hired by property owners or other parties to assist them in research that might include graphs or data, but not a value opinion. Honestly, I really like this type of work because it is interesting and very intricate.

Call me at 916.595.3735 if you have any questions or a need for appraisal consulting or appraisal work.

I mentioned a couple weeks ago about getting a new phone for my appraisal business. Well, during some time off last week I bought a myTouch 4G by T-Mobile. This is definitely an upgrade from my G1.

The features I like most so far about the myTouch4G include: the internet speed is so much faster than my previous phone, it plays flash videos, tethering, two camera lenses, there is a flash on the camera, it’s very easy to sync with Google apps, the flashlight app is far more than just a lit-up screen, it has a decent camera and a great video camera, no dropped calls yet, and there are seven screens. It doesn’t have a pull-out keyboard, which I thought would be a deal-killer for me, but I’ve adjusted quite easily to the on-screen touch keyboard.

Here is a video overview of the myTouch 4G below (or an external link). 

On the job I anticipate using the following apps and features the most: Square (to accept credit card payments by phone), flashlight, video, camera, email and internet of course, social networking to connect with clients, Google Voice, Google Calendar, and Google Maps. The phone does have a video chat feature, but I don’t know that I’ll really use that during the business day.

Having the right technology for business these days is very important to me so I can stay in touch with clients and be a quick resource as needed. What tech gadgets make your business run smoothly?

I’m doing some research in the Meadowview area of South Sacramento right now, and I wanted to share a trend graph. Check out the past three years of sales for all properties south of Meadowview Road, east of Freeport Blvd, west of Detroit Blvd, and north of vacant land (excluding newer construction built in the past ten years – that’s really a different market despite being located in the same boundaries).

Based on the graph above, when do you think a wave of foreclosures hit the market in the past three years? You got it right. The market was really hurting during the last quarter of 2008 and the first couple quarters of 2009. There is evidence that the market was already struggling in 2007, but the decline really went into high gear in the latter part of 2008. This release of the foreclosure floodgates caused a hefty and quick decline in property value as can be seen above. You can see also that the market has since since experienced some recovery. In my opinion, beyond inventory decreasing, one of the things that has helped to shape property value over the past couple years in this neighborhood is investors purchasing and flipping properties. There have been an enormous amount of flips in this area.

If you have any questions, let me know. You can give me a call at 916.595.3735, email me, or comment below.

I wanted to give you a little tour of a dark boarded fixer-upper house in South Sacramento. Honestly, sometimes it feels a bit creepy to inspect houses like this because utilities are off and every window and door is boarded with plywood. You never know what or who might be lurking in the darkness, right? 

As always, I had permission from my client to shoot and share video. I take client confidentiality very seriously for every appraisal I do, and I never share information on my blog or elsewhere that is confidential.

Let me know if you have any questions. Call me at 916.595.3735, send me an email, or connect with me on Facebook or Twitter.

What do you think of the video?

Numbers can tell us anything. For instance, we can look at median price or price per square foot for a particular neighborhood or zip code, but these figures do not necessarily reflect specific market value for a specific property, do they? For example, let’s glance at a condominium subdivision in the 95825 zip code of Sacramento as an illustration. The median price for the year for the entire subdivision (all sales listed below) is around $70,000. However, this figure alone does very little to help us understand the market because there is a clear distinction between 1-bedroom and 2-bedroom units, isn’t there? You can see below that 1-bedroom condos are bracketed between $45,000-$65,000 whereas 2-bedroom units sold between $75,000-90,000 more or less (with only one 2-bedroom condo above $100,000).

So how much is the market willing to pay for an extra bedroom in this complex? Before reading the next few sentences, you be the appraiser and tell me. Based on the graph above it looks like the difference in price between 1 and 2-bedroom condos is generally about $25,000-$35,000 (plus or minus). Other factors to consider in the valuation process of course would be floor location, condition, level of upgrades, location of the unit (next to swimming pool, secluded, backs busy street, interior unit, etc…). 

Why do you think the market is willing to pay so much more for a 2-bedroom unit? What advantages does a two-bedroom have that a one-bedroom does not? I’d love to hear your insight.

If you have any questions about the appraisal process or condominiums in the Greater Sacramento Region, give me a call at 916.595.3735, email me, or catch me on Facebook.

If a picture is worth a thousand words, what story does this photo tell? This is the closet of a bank-owned property I appraised a few months back. My client gave me permission to share this photo.

There were multiple places in this house where animals appear to have been kept in closets or near doors because sheetrock is scratched up as well as trim and baseboards gnawed. I don’t know if this was some sort of illegal “grooming” facility, but clearly these animals were not being properly cared for.

How does this image strike you?

Home owners ask me sometimes about the average price per square foot for their neighborhood. Honestly, I pay attention to the price per sq ft as one of many real estate metrics, but it’s not the end-all solution to valuation by any means. Let me illustrate my point by presenting a graph of all sales in the Anatolia neighborhood of Rancho Cordova over the past twelve months.

Over the past 90 days Anatolia has had an average price per square foot of $103. If Joe the Home Owner then took this figure and applied it to his home, let’s see what he comes up with. Imagine he has a house at 1000 square feet. In theory, Joe’s house should be worth $103,000 (1000 x $103), but the graph shows homes at 1000 square feet sold between $140 to $150 dollars per square foot actually. Let’s look at 2000 square feet. It looks like $103 works very well for some houses, but other properties at 2000 square feet clearly sold closer to $250,000 (that would be $125 per sq ft). Let’s look at even larger homes. Many 4000 square foot properties sold well under $103 per square foot, and houses around 5,550 square feet sold closer to $81 per square foot ($450,000 / $103). 

As you can see, an average price per square foot figure is not constant for all houses in a neighborhood. Simply multiplying your square footage by the average price per square foot for your area, city or zip code may or may not work, and will very likely not give you an accurate number.

Question: When looking at the graph above, what size of home do you think might give you the best return on your dollar?