If you have been following real estate trends in the Greater Sacramento Region, you have probably noticed that overall there have been fewer foreclosure listings over the past few months and therefore an increased demand for bank-owned properties (resulting in multiple offers and many times offers over asking price). Banks have been holding on to some of their distressed inventory and not releasing these properties on the market. Well, it looks like a moratorium for 90 days may go into effect today per CBS 13 in Sacramento. All of us in the real estate industry have expected a wave of foreclosures to hit the market for many months now, but it looks like that won’t happen for at least another 90 days. Investors, clients and agents have been telling me that this wave would come in March, but then the buzz was June, and then July, and maybe now September. We shall see. What do you think of this?
What does it take for a Sacramento area property to meet minimum FHA requirements?
What does it take for a property to meet minimum FHA requirements? This is a very important question because FHA loans have become extremely popular in the Greater Sacramento Region, especially among first-time buyers.
FHA is primarily concerned that everything in a house functions properly and that there are no health and safety issues. As an FHA approved real estate appraiser, the inspections I do are based upon guidelines from the United States Department of Housing & Urban Development (HUD). Here is a sample of some of the things I look for while on an inspection:
- Appliances must be in functional use. If there is a hood, it must work. If there is a dishwasher it must work. If there is a stove, it must work…
- The heating unit must be in working order (and AC if applicable)
- Paint must not be chipping, peeling, or flaking on homes built before 1978. There must be no defective paint or exposed wood for properties built after 1978. If there is an issue with paint, it needs to be cured properly by actually scraping the paint instead of just painting over with new paint.
- The water pressure must be adequate for the house. Appraisers flush toilets, turn on all faucets and ensure that both hot and cold water are working.
- The water heater must be in working order.
- The attic must be inspected and we make sure that there are vents, no evidence of a previous fire, no exposed or frayed wires, and that sunlight is not beaming through.
- Attics and crawlspaces are to be viewed at least with head and shoulders into them (if present)
- The crawl space must be inspected and we make sure there is not excessive debris or signs of standing water or any other foundation support issues.
- Electrical outlets must work.
- Toilets must flush and be mounted
- No leaks in the roof.
- The carpet does not have to be perfect (stains or minor tears okay). If there is a health or safety issue with the flooring, then that is a red flag.
- A house does not need new interior paint.
- Windows cannot be broken. Cracks can be okay so long as there is not an issue with safety, soundness and security.
- No dangling wires from missing fixtures.
- Water heaters must be properly attached with straps (local code says that water heaters need to be strapped and FHA requires water heaters to meet code).
- Stoves are not required unless they are drop in stoves.
- FHA doesn’t require air conditioning, insulation, smoke detectors or the like, but if they are there they must work as they were intended.
Please let me know if you have any questions. I am glad to help buyers, agents, brokers and anyone else know more about FHA standards and the appraisal process. The great thing about FHA loans too is that the buyer, agent or broker can readily choose whatever appraiser he/she wants because HUD is not bound by HVCC (this is a new law that basically means that brokers and loan officers cannot directly order appraisals from real estate appraisers when the loan is geared toward Fannie Mae). You are welcome to contact me (Ryan) at 916-595-3735 or LundquistCompany@gmail.com
A Note to FHA Buyers, Agents, & Brokers in the Greater Sacramento Region Regarding HVCC & FHA
Dear Local Buyers & Agents in the Greater Sacramento Region-
The Home Valuation Code of Conduct (HVCC) is a new law that went into effect on May 1, 2009. What this law aims to do is eliminate pressure from loan departments on appraisers to arrive at a certain conclusion of value. One of the biggest changes since HVCC took root is that loan departments can no longer directly communicate with the appraiser about value-related issues and so they must use an appraisal management company (middle man who takes away part of the appraiser’s fee) or work out some other arrangement to have an in-house department that handles appraisal ordering. As you can imagine, this has certainly changed business for many appraisers as well as loan officers and banks because many of our business contacts are no longer viable sources of connection for doing business. Everyone is adjusting and there are many people who are unhappy at the process.
THE GOOD NEWS though is that when FHA financing is being used, the buyer, agent or broker can readily choose whatever appraiser he/she wants because HUD is not bound by HVCC. In a market full of FHA financing, it is still possible then to work with any appraiser you want to.
NOTE: Home owners, lawyers, investors and others can hire a real estate appraiser any time they want to. If the purpose of the appraisal is not a loan geared toward Fannie Mae (eventually sold to them), then the Home Valuation Code of Conduct DOES NOT apply at all. There has been some confusion on this matter since May 1, 2009, but the truth is that HVCC only applies to loans that may eventually be sold to Fannie Mae. I do appraisals for estate settlement, divorce, property tax appeal, bankruptcy, second opinion of value, home-repair loan programs, litigation and other purposes that have nothing to do with a loan geared toward Fannie Mae. Thankfully in these cases I am able to work directly with home owners, investors, agents or local governmental agencies among others.
Please let me know if you have any questions. Thank you.
Your local appraiser,
Ryan Lundquist
Lundquist Appraisal Company
PH: 916-595-3735
FAX: 916-361-1964
EMAIL: ryan@lundquistcompany.com
WEBSITE: www.lundquistcompany.com
“Stone Creek” Neighborhood in Rancho Cordova: Photos From the Field
Yesterday I took some photos from the field of the “Stone Creek” neighborhood in Rancho Cordova.
Stone Creek is a fairly new community within Southern Rancho Cordova in the 95670 zip code just South of Highway 50 in between International Drive & Mather Air Field basically. Stone Creek has a unique plan in that it has a large bike/walking path that basically surrounds the entire subdivision. Additionally, Stone Creek has a very nice 21-acre park (Stone Creek Community Park).
This neighborhood is not difficult to spot since there is a giant water tower on the Eastern end of the tract. Have you seen this one while traveling South on Sunrise Blvd?
Stone Creek is just North of Mather Air Field and there is still some vacant land to be built on (probably when the market rebounds). The image below is of the Stone Creek community in the background along with vacant land in the foreground.
This is a view of part of the bike trail/path along the perimeter of the subdivision.
I am very familiar with the Stone Creek neighborhood from my real estate appraisal experience within the community. If you have any questions about Stone Creek or any potential real estate appraisal needs, please contact me at www.lundquistcompany.com or 916-595-3735.