New unemployment stats are out for Sacramento County. The unemployment rate dropped from 11.4% to 10.5% from March to April 2012. This is a big drop for one month, so we’ll have to see what coming months yield to see if this is just a blip or not. Whatever the case, it’s nice to see the overall downward trend in unemployment over the past year. It’ll only mean good news for the housing market to keep seeing this number decline. Source: EDD.

Here is a graph of unemployment in Sacramento County since 1990 to give a panoramic view of the job market. It’s amazing to consider the history of where we’ve been (and maybe a bit depressing too).

Do you want to share these graphs? If you’d like to use these graphs on your blog or website to be a resource to your readers and clients, please do so. If you need a larger size for a presentation or newsletter (or your blog), let me know. Please see my sharing policy for details. As always, thank you for linking back to me and keeping my images intact. It’s a huge honor when others share my content.

What do you see above? Anything stand out to you?

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

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.

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.

If you know anything about FHA loans,  you know a defective paint surface is something that needs to be cured. If the exterior of a house has chipping, peeling or flaking paint, it can be a health and safety issue if the house was built before 1978 due to a potential for lead-base paint exposure. If you didn’t know, FHA has an exhilarating 51-page manual for how to properly cure a defective paint surface (PDF). This is just the type of ready you love to do, right?

DO NOT LEAVE PAINT CHIPS ON THE GROUND: If you’re dealing with a defective paint surface, make sure you or your contractor scrape away any defective paint and then completely reseal the surface with new paint (or some sort of HUD-approved sealant). Moreover, DO NOT leave paint chips or any defective paint dust or residue on the soil. This might seem like a minor point, but you don’t want to have to deal with potential environmental consequences for lead-base paint touching the soil, right? The appraiser cannot verify the paint problem was taken care of if there are paint chips all over the place on the soil.

This is why I include something like the following in my lender reports:

The appraiser noted a defective paint surface on the southern portion of the house near the roofline. All this portion of defective paint should be properly scraped and there should be no bare wood after scraping. The surface should be repainted or sealed according to FHA standards. As always, there should be no paint chips or paint dust left on the soil when the issue is cured.

I’ve written quite a few FHA appraisal articles in case you’d like to know more. Let me know if you have any 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.

I’m available to teach the following classes for real estate or law offices. Each class can be tailored to fit a time slot in your office meeting. If any of the classes below sound relevant for your company, let’s set up a date. I prefer groups of 10 or more where possible and 30-45 minutes to have discussion. As long as you are local, there is no charge. This is a great way for me to share solid information and build relationships with local agents and offices. I look forward to connecting soon.

Overview of FHA Property Standards: Since FHA has been so dominant in the market, it’s important to understand the nuts and bolts of what appraisers look for during an FHA appraisal inspection. What does it take for a property to meet FHA minimum requirements? This class will help when listing and marketing a property as well as communicating with loan officers too. See my FHA appraisal articles for reference.

How to Challenge a “Low” Appraisal: Have you had a bad appraisal on one of your deals? What can you do when an appraisal comes in lower than it should? This class goes through a specific format to help you prepare a solid reconsideration of value. We’ll discuss fundamentals about reviewing an appraisal report (what to look for) and specific ways to challenge a low appraisal. Bring your laptop if you have one since we’ll be looking at a Word document together (you’re fine without one too).

Effective Blogging for Real Estate: Real estate blogging has been a big part of my business and it’s something I enjoy doing too. Blogging is an opportunity to share knowledge, build relationships and connect with existing and potential customers. If done right, a blog can help build credibility and expertise for your real estate business as well as serve as a place where potential clients can feel you out before deciding to do give you a call. This class is full of tips, how-tos and gives a framework for creating original content too. Check out “tips for real estate blogging” to get a sense of my blog philosophy.

How to Make Solid Real Estate Videos: Video is a very powerful tool for sharing information and connecting with clients. A good video can help build trust and convey professionalism for your brand, but a bad video can accomplish the opposite. This class will be very practical as we discuss how to create videos that help you stand out (in a good way). We’ll actually edit a video in class so agents can have hands-on experience knowing what to do. I create videos regularly for clients, non-profit ventures, my Sacramento appraisal business and to promote YPC events through the Sacramento Association of Realtors. I also started a real estate video site called “Sacramento Real Estate Tube”.

Introduction to Appraising: This class is great for new agents, lawyers or loan officers to help get them up to speed on the appraisal process. We will look at a common appraisal form to get a good grasp of what an appraiser looks for and how an appraiser does his job. We’ll also discuss practical tips for interacting with appraisers (things to say and not say). While a class of 10 or more is usually preferred, lower numbers are more understandable for an introduction like this.

Let me know if you have any questions or if you want to book a class. Call, email, or text message and I’ll get back to you promptly.

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 wanted to wish you a very merry Christmas. May you find joy and rest during this holiday season, hopefully not too much drama with family and vision for the coming year ahead. I’ll be taking the rest of the year off from blogging to enjoy some time with family and friends. Thank you for stopping by the Sacramento Appraisal Blog for 207 posts in 2011. I’m really looking forward to connecting in 2012. Again, thank you for all the conversation and sharing of life and business this year.

Merry Christmas and Happy Holidays!!

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 met up with a real estate investor friend today to shoot a short video of one of their current rehab projects. Housing Group Fund recently purchased a bank-owned property in the Sacramento area that had been sitting vacant for a very long time. This property actually racked up $48,000 in code enforcement fines too during the long process of foreclosure and vacancy. Anyway, here is a 30-second clip I put together to show the beginning point of the rehab process.

As shown in the video, I found the “pool cover” to be an inventive way to help avoid the safety risk of an empty pool and maybe avoid damage from skateboarding too. This cover was already on the property when it was purchased. What other ways have you seen a pool ”secured” when there is no water?

Offering appraisal services to investors is one of my favorite roles because I enjoy seeing the “before” and “after” product as well as working outside of the scope of appraisals geared toward Fannie Mae. I am not doing any appraisal-related work on this particular house, but in other cases investors will order an appraisal from my company in order to do the following: 1) Present the appraisal to the funding source to secure capital for the project; 2) Use the appraisal as a part of a federal or state rehab program (particular programs simply require an appraisal); 3) Use the appraisal for marketing purposes to include in MLS for buyers and agents (or to get an idea of the “after improved” value for listing purposes).

I hope you enjoyed the brief video. Let me know if you have any 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.

If you know anything about FHA loans, you’ve likely heard the phrase “health and safety”. That’s because FHA has requirements for a property to be safe and sound for occupants. I shot the video below at a recent inspection. While it may not be a “health and safety” issue if a stair railing has a tiny wobble, this rail is definitely ready to give at some point, which means it’s an obvious safety issue that needs to be addressed before the loan can close. One interesting note is that the listing agent said some of the potential buyers for this property actually backed out in light of being turned off by the wobbly staircase. So on top of being an FHA issue, it’s been somewhat of a deterrent in the market too. See a previous post if you’d like to read about the 10 most common FHA required repairs.

Any thoughts 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.

If you’re not famliar with the appraisal process, I hope this post can help you know what to expect during an appraisal inspection and how you might prepare for the inspection too. Sacramento Realtor Doug Reynolds interviewed me recently in the video below to get some tips for buyers and sellers. You can check out a more extensive list in a previous post entitled What Should You do Before the Appraiser Comes? Let me know if you have any questions, fears or stories about an appraiser coming to inspect your property. You can give me a call or send me an email.

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 is the real estate market doing in the Greater Sacramento Area? Let’s feel out one aspect of the market’s health today by looking at the level of distressed sales in multiple counties such as Sacramento, Placer, Yolo, El Dorado, San Joaquin and more. As you can see in the chart below, most counties in the Sacramento Region have a combined percentage of distressed sales (bank-owned and short sales) between 60-70%. Does it shock you to think that 6 to 7 out of every 10 sales are distressed? Data within a specific neighborhood or city may of course not reflect the trends listed in an overall given county (as in the clear case of the City of Davis in Yolo County), but the countywide panoramic picture is still important to keep in mind when keeping tabs on market health since regional or countywide trends can tend to impact smaller neighborhood markets over time.

What stands out to you about the figures 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.

Realtor Doug Reynolds interviewed me a short while ago about the impact of distressed sales in a neighborhood. How do short sales and foreclosures impact the real estate market in the Sacramento area? Here are some thoughts in a one-take video interview. For specific statistics, check out “Dear Doctor, how healthy is the real estate market in Sacramento?” and “What happens to foreclosure when prices go up?” I found the data in both of these posts to be very interesting. Enjoy.

Any other insight or thoughts about the affect of distressed sales?

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.

This is exactly what happens when a bank gets tired of having their AC units hijacked from foreclosed properties. I saw this “REO cage” on a Fannie Mae property in Sacramento recently. Yes, each leg is bolted to the ground.

What a sign of the times, don’t you think?

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.