Sacramento Appraisal Blog

Market trends and real estate appraisals for divorce, estate settlement, loans, property tax appeal, pre-listing and more. We cover Sacramento, Placer and Yolo County. We're professional, courteous and timely.

The FHA Mortgage Insurance Myth in Sacramento

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I’ve been hearing a myth lately about FHA buyers that I’d like to humbly address. The idea is that since mortgage insurance is now permanent for the life of an FHA loan as of several months ago, this new rule has harmed FHA buyers and caused a decline in FHA market stats too. I’ve heard this quite a bit lately – even from some very seasoned voices in the real estate community. I get where people are coming from in believing this because in theory it really does make sense to think FHA would be on the decline because of the greater expense involved for the duration of the loan. However, what do the stats actually say? I give a brief market update in the video below and then get into the FHA issue. Watch the video below or click HERE if you subscribe by email and cannot see the video (or go to the FHA section here – less than 2 minutes).

This just goes to show that sometimes real estate trends can go against what we think should be a normal response in the market. The truth is owner-occupant buyers are starving to get into contract after a year-long beat-down from cash investors. In short, along with conventional buyers, FHA buyers are picking up the slack of investors leaving the market, and they are absolutely willing to pay mortgage insurance for the life of the loan (heck, they probably figure they won’t be in the house for 30 years anyway).

5  4  3  median price and inventory in sacramento county - by sacramento real estate appraiser blog

Share the Trends: You can share the graphs above in your newsletter, on your blog, Facebook or any other social place. The only thing I ask is you keep the images intact and link back to my blog. See my sharing policy for more information. Enjoy.

Question: Any thoughts or insight? I’d love to hear your take below.

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Things that make value move in Sacramento

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I’ve been talking quite a bit lately about “layers of value” or things that impact the real estate market. Values increase or decrease based on many factors. Let’s look at the image below to see some of the bigger influences for the Sacramento market. I shared a similar photo recently, but expanded it to include monthly mortgage interest rates and unemployment. What do you think?

Sacramento real estate market trends - interest rates median price and inventory - by sacramento real estate appraiser blog

Sacramento real estate market trends - interest rates median price and inventory - by sacramento real estate appraiser blog - largeSeeing the Trends: We all know an increase in interest rates and inventory tends to cool down values. That’s Real Estate 101. Yet at the same time, it’s still good to see visuals like this to reinforce what we know and also anticipate what the future of the market will look like as current trends unfold. As you can see in the image above too, there is definitely a stabilization of values that occurs toward the end of each year as the colder months ensue. Click the thumbnail to view a larger image to see this more clearly. By the way, feel free to use this graphic (unaltered) on your blog, social media or in a presentation. The only thing I ask is you link back if online.

Question: Any thoughts, questions or insight to share? Comment below.

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Why do appraisers take so long to finish the report?

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You had an appraiser come out to your property last week and the appraisal is still not complete. It’s been 10 days!! What is going on? Here are some reasons why the appraisal might be taking so long.

appraisal inspections sacramento area

  1. Liability: Appraisers have to support the value in the appraisal report and be liable for that value, so appraisers should take their time to finish a job right (within a reasonable time frame of course).
  2. Juggling Work: Keep in mind appraisers are likely juggling many different appraisals at any given moment. This means all files in an appraiser’s briefcase are probably not being worked on every single day. If an appraiser only had your house to appraise, it would be easier to finish the appraisal sooner.
  3. Complex Assignment: If your property is complex, it may take longer to finish the appraisal since there is simply less data available for comparison. Most of my lender clients want appraisals back in 7 calendar days, which is usually very doable. However, when a property is out-of-the-ordinary for some reason, it’s nice to have more time. Sometimes upon inspection the appraiser will find out the property is much more challenging, so that can warrant a need to renegotiate the due date. I find most private party clients for divorce or “Date of Death” do not operate on the same time table as lenders since it is much more common to have easily 2-3 times as long to complete assignments.
  4. Extra Days with the AMC: Appraisals for lenders are often ordered by AMCs (Appraisal Management Companies). The appraiser might have completed the appraisal in a timely manner, but it could have sat in the hands of an AMC’s processor for an extra day or two on the front end and then an additional day or two on the back end as the appraisal goes through the AMCs quality control before the report is actually sent to the loan officer.
  5. Client Timeline: If the appraisal was ordered from the lender, find out what the actual timeline was that the lender gave the appraiser. After all, the lender may have given the appraiser 14 days. If a client gives an appraiser a long leash, the appraiser is likely going to enjoy the luxury of more time.
  6. Busy Schedule: If an appraiser is incredibly busy, that may unfortunately push back deadlines. That’s never ideal, but it happens in every industry.
  7. Lack of Professionalism: There are of course examples where an appraiser simply mishandles time or an appraisal, which can cost a client money. There is no excuse for that.

Advice for hiring a real estate appraiser:

  • Ask the appraiser when the report can be in your hands (before you hire the appraiser). Be sure you are on the same page about deadlines.
  • Let the appraiser know when you specifically need the report.
  • Have realistic expectations about time.
  • Get something in writing about when the report will be completed. The appraiser likely has an order form that you can fill out (get a copy of the order). Or you can always talk via email back and forth and use that conversation as your agreement.
  • If you need something right away, you might want to offer to pay a “rush” fee.
  • Be leery of “fast and cheap” appraisal marketing. If you have a delicate situation and you do have the luxury of time on your side, find an appraiser who will take more than 24 hours to appraise your property.
  • Sometimes clients might say something like, “I know the report will be in my hands next week, but can I just get the value now?” The value ultimately comes at the end after all research has been completed.

I hope this was helpful.

Question: Do you have any stories to share or any questions? Let me know.

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3 reasons why knowing real estate trends is NOT just for data geeks

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Isn’t real estate data just for people who like math and numbers and wear pocket protectors? Not at all. Understanding the trends of the market can make a huge difference with business and marketing for anyone in the real estate industry. Let me unpack what I mean. I’d love to get your thoughts below too.

Image purchased by 123rf dot com and used with permission by Sacramento Appraisal Blog - 530

Three reasons why knowing real estate trends is NOT just for data geeks:

  1. Be the Professional: When you study real estate trends, you hands-down become the professional. People will start to look to you for insight in meetings, online and wherever you are. Because you are in the habit of doing your homework, you are able to quote market statistics off the cuff. You can talk about the exact amount of housing supply, percentage of FHA buyers, number of cash purchases, unemployment, interest rates and other influences that are driving the local real estate market. Bottom line: Knowing trends boosts your credibility.
  2. Be a Resource to Clients: Clients feel more confident when you can talk definitely about what is happening in real estate in specific terms. It gives them security that you know what you are talking about and that you are giving them good advice. For instance, consider which sounds better: “There are more houses for sale right now than in past months” or “Inventory is now at 2.1 months in Sacramento County, which is double of what it was several months back”.
  3. Know Your Future Clients: When you pay close attention to numbers, it’s possible to get a glimpse of who your future clients might be. For instance, when we see FHA increasing and inventory on the rise in Sacramento County, this tells us buyers are gaining more power (and there will be more sellers to work with too). Also, keep in mind Fannie Mae’s 97% loan is going away in mid-November, which will help increase FHA’s prominence in the market. Cash has been moving out-of-town too, which is important to consider if the bulk of your clients are investors who entered the market a year ago when the market was red hot. On the other hand, since foreclosures only represent 5% of all sales in Sacramento County, it’s probably not the best time to try to be an REO specialist. Similarly, short sales used to be well over 30% of the market, but now they’re only 15%. There is definitely still a need for short sale service, but the downward trend is worth considering for the long term.

BONUS MATERIAL: Some places to go to study local market trends

  1. The Sacramento Appraisal Blog: I know, I just mentioned my own blog. But I work hard at what I do and I think I’m providing helpful information. If you read the “market trends” category carefully, I go over stats every single month. If you don’t want to miss posts, then subscribe by email.
  2. TrendVision: Any member of the public can go the public Trendvision link here and create all sorts of graphs. For MLS subscribers though, there is much more detail. When you log in to MLS, click “Trends” on the navigation bar. There is so much great information there, and you can search by zip code, area or county. Whenever you are working a neighborhood, take a minute to quickly look over things like inventory, median price and average price per square foot (do a 6 or 12-year glance of the market too to get a better perspective).
  3. Sacramento Association of Realtors: If you haven’t bookmarked the statistics page for SAR, go do it. If you are a member, you can log in under “Realtors Only” and there is a ton of historical information and even graphs.
  4. Websites & News Outlets: For local real estate news you might want to check out The Wright Report, Altos, Department of Numbers, FHFA Price Index, Freddie Mac Price Index, DataQuick, Calculated Risk Blog (search for “Sacramento”), Sacramento Business Journal, Sacramento Bee etc… You can check out Sacramento Landing too, but unfortunately the blog has not been updated in a long time (see the list of data sources on the sidebar though).
  5. EDD: Unemployment rates for California and local cities.

I hope this was helpful. I’d love to hear how you use data and trends in your business.

Question: What other data sources do you use or suggest? Comment below.

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