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Here is a quick snapshot of housing inventory in Sacramento County for the past ten years. I used a graph from Trendgraphix as my base to highlight some of the major happenings in the market. It’s interesting to see parallels and differences between the previous boom and the recent surge in values. Any thoughts?
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If you meet appraisers at your listings, do you feel like you have a valuable exchange or are you simply handing over a stack of comps?
Help for Agents: Today I want to give some quick tips to help facilitate better interactions so real estate agents can communicate well about their listings and appraisers leave with a deeper understanding of the property and transaction. I realize that some appraisers are pretty much non-communicative, but even if that is the case, you can still get across good information by following the tips below.
Advice on Giving “Comps”: If you do provide sales and listings to the appraiser, make sure they are actually competitive (similar) rather than the highest sales in the neighborhood that happen to meet the subject property’s contract price. I recommend providing a full detail MLS print out too (including the other agent’s information) so the appraiser does not have to re-print your sales to get the full scoop. This saves paper and time. If you want to go the extra mile, take a few minutes to write notes on the top of each sale to help highlight differences between the subject and other sales.It’s easy to let these details slide because life is busy, but taking time to prepare to meet the appraiser is definitely something worthy of building into the rhythm of business. Every other detail in the transaction is handled with great care and attention, so it seems fitting to do the same with the appraisal inspection too.
I hope this was helpful. Any stories or questions? Comment below.
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It’s not always easy to understand how the market sees a property, right? This is especially true for something unique. Well, let me share two things I sometimes do to pick up a deeper perspective on a property. Nothing replaces current data of course, but understanding how the market has historically responded to a home can be really valuable when sifting current trends.
1) Previous Sales: If a house has sold any time after 1998 on Sacramento MLS, you can do a search for other nearby properties at the time of the respective sale. If before October 2008, then use the “Archive” search feature on MLS (you can draw a polygon map there too). As an example, I was talking with a Realtor friend about a tricky property he was hoping to list, and after looking up the sales history for this house, I saw it had sold previously in both 2005 and 2008. There were very few recent sales in this custom neighborhood other than larger and more upgraded homes, so having two previous sales to research was like a gold mine to help answer questions like: What types of houses did the market see as comparable during the sales? What was the price difference between the subject and homes with uber upgrades? How much more did the market pay for larger-sized homes? Assuming there was nothing funky about the previous sales, this search can help give a little more context for historic neighborhood trends and even help support choosing the right comps today. Take this for what it’s worth and realize it’s just one more way to help gain a little more insight.
Example: The graph below shows two previous sales of a property in a particular neighborhood. How did the market respond to a newer property with less charm in an older area of Sacramento? What does the graph tell us? This might give us some insight for choosing comps today, right?
2) Past & Current Market: Secondly, if you’re been following trends, you’ve probably noticed current values in the Sacramento area are similar to levels somewhere around 2002 and 2009 (as the graph below illustrates). While it was unfortunate to see the market collapse in previous years, it’s actually useful from a data perspective to be able to compare current price levels to two previous time periods when values were similar. For instance, if you research sales around 2002 and 2009 in a neighborhood, you might be able to glean a better understanding of how the market has traditionally viewed similar properties or even value aspects such as location or size. This is also a bit of a check to see if your pricing is mostly in sync with trends or if you’re getting too aggressive by using 2005 price levels. Ultimately, this is only to gain more context, so take it with a grain of salt. Be sure to use caution too because not every neighborhood or property type is at the same historical value level right now.
Thank you Brian: By the way, I want to thank Realtor/Broker Brian McMartin for sharing some incredible graphs with me this week. The data geek in me was rejoicing when he sent over a stuffed Excel file of trends he watches closely to share with his clients. I made the graph above based on his information, and I really appreciate his generosity to share some of his hard work with me (and you). Click the thumbnail to the side to view one of his graphs.
Anything you’d like to add? What do you think?
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Today I wanted to share some of the small but interesting things I’ve seen lately while out in the field during appraisal inspections. All of these images help illustrate something about real estate.
1) Iron Bars & New Construction:
Does anything catch your eye about this house? When driving through a two-year old neighborhood in Elk Grove, this property caught my attention because it’s literally the only house with iron bars on the front. I’m not saying there is anything wrong with bars or even that they adversely affect value, but they are definitely not typical for this neighborhood. It’s always important to consider that the type of fence or front yard presentation can impact value. Is this a positive, negative or neutral feature? Would it be a big deal if every house on the street had bars?
2) A fireplace chopped in half:
What’s the story here with this house on 12th Avenue? Maybe a recent attic conversion along with other additions? Or maybe a fireplace relocation? By the way, I asked a handful of real estate agents recently if they would ever recommend removing a fireplace and their response was overwhelmingly no. What do you say?
3) Loose straps
Appraisers aren’t code enforcement officers, but they do know something about code for water heaters. While many conventional lenders do not require the appraiser to verify if the water heater is double-strapped (some do), FHA appraisers do need to ensure the water heater complies with local standards. In the instance above, the water heater was clearly not properly strapped since I shouldn’t have been able to easily fit my entire hand between the strap and the heater. And no, I’m not a hand model. 🙂
4) A “shocking” light switch location:
I was surprised to find this light switch literally inside of the shower. Do you think this might be a safety issue?
5) An appraisal in 1996:
This is a California Market Data Cooperative book from the 1990s. These books are full of charts of real estate sales information, and they used to be published almost monthly before sales data went online in 1998 through Metrolist in Sacramento. I have a stack of these books in my office right now since I’m doing a “Date of Death” appraisal based on a date in 1996. I’ll use these CMDC books to find comps, verify sales data and analyze market trends. It’s definitely a tedious process to establish a value this way, but I’m grateful these books are at my disposal thanks to my membership with the Real Estate Appraiser’s Association of Sacramento (REAA). Otherwise I was going to need to contact some long-time brokers to find someone willing to lend or rent me these books.
6) My backyard garden
Lastly, this is personal real estate for me. I mentioned in the beginning of the year one of my goals was to finish the backyard garden that was supposed to be done last year. I’m pleased to announce that after ripping out 30% or so of my rear lawn last year, and then putting the project on hold for about nine months, I finally finished the job last week. I’ll be honest, it feels really good to check this goal off my list.
Have you seen anything interesting lately relating to real estate?
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