I have talked to a lot of homeowners who have had an unsuccessful attempt at refinancing due to an appraisal that is “light on value”. Or people who couldn’t sell their house because of “the damn appraiser”. In those conversations, I have heard all kinds of reasons why they feel short-changed.

We have new carpet.

We have a new deck.

We just painted.

We replaced the roof.

The problem is that none of that really matters in a discussion of value. Sure, it’s nice stuff. Sure, it adds value for you as a homeowner. And it is definitely appealing to someone who may want to buy your house.

Hell, it may even be icing on the cake when it comes to determining your home’s true market value. But, it’s not as important as…

THE CAKE

by Evan-Amos

If you really want to know what counts to an appraiser, which is the person whose opinion of market value is the gold standard of the Real Estate market, I will share that with you:

It’s comps.

Comps, or comparable sales, are the single most important factor for determining market value.

Skies of blue, Clouds of white

In a perfect world, you would be able to find 3 recent sales within a mile of your house that were within 2% of your target value.

by Mr. Bigg Graphic Design

But we all know that the Real Estate market isn’t always like a Louis Armstrong song. Sometimes it’s more like an old, warped polka record.

If you are in the highly populated areas of Portland Metro, you might have 3 recent sales within a mile of your home. But two of them are being sold by Fannie Mae or Freddie Mac, who are happy to take the gaspipe on value just to move them off the balance sheets.

If you live in an area that is more rural, you might not have any recent sales. Period.

The fact is: you have very little control over your home’s value.

Sounds pretty bleak, right?

The Silver Lining

Even though you may not have much say in your home’s value, you do have the ability to access much of the same information that professionals use to determine market value.

Real Estate transactions are matters of public record. You can go to the court house and look up who bought what house when. Just sit right down in front of one of their computers, and scroll through property records.

But maybe you’re looking for something more efficient.

Of course there are websites you can look at. Zillow, Listingbook, and on and on. You should realize that a lot of these sites are primarily for the purpose of providing any information you provide to Real Estate agents and Lenders in the form of leads.

Beware of the forms you fill out. There are varying degrees of information you can get without signing up, depending on the website you are on.

Now you probably won’t be able to determine an exact number regarding your home value. But you will be able to determine what level of activity there is in the neighborhood.

And, the neighborhood activity is the first step to understanding what your home’s value actually is.

As a Licensed Mortgage Dude, Title companies provide me with tools to look this information up. If you are seriously considering buying a home or refinancing your mortgage in Oregon or Washington soon, I would be happy to make those available to you. The reason I say “seriously” is because I get a limited amount of uses per month, and I’d like to share those with people who are acting soon.

If you are selling, I would recommend getting a CMA from a Real Estate Broker. If you want, I would be happy to pass on the name of a reliable Broker.

Fill this form out, and I will help in any way I can. And your information will not be sold ;-)

Home Value: The Cake Is What Matters originally appeared on home loan ninjas on December 6, 2011.

When it comes to buying a home, timing is everything. I’m not talking about timing the market for optimum home prices or interest rates.

I’m talking about the home loan process, and the timeline associated with it.

Great Expectations

I have previously joked around about Real Estate agents wanting to “jump the gun” when it comes to ordering the appraisal. However, in all seriousness, it has become quite clear to me once again that the everyday reality I take for granted isn’t always well known.

There are all sorts of legal requirements that apply to what I do. The home loan business is quite regulated; increasingly so in the last few years, in case you hadn’t heard ;-)

One of those legal requirements/restrictions is that I am not allowed to order your appraisal until 5 days after the terms of the loan have been disclosed to you.

Buying a home – Disclosure

Let’s say that you are buying a home, and I have taken your loan application. I’ve collected your income documentation, gathered up other items like the title report, and I have packaged your request for financing up and sent it to the lender. The lender (or bank) does a bit of a quality assurance check to make sure that everything is in keeping with the laws that regulate them. Once those criteria have been met, they will send you disclosures. These disclosures give you the terms of the loan; rate, cost, length, penalties, your rights, the bank’s rights, etc.

One of the changes made to the laws governing the mortgage industry is that you have to have these documents for 5 days before any fees can be collected. This includes the appraisal fee, which is paid for before the loans closes.

Obviously, this provision exists to ensure you have ample time to review the terms of the loan you are applying for. This is one of the consumer-protection rules that I think actually works well for people who are buying a home.

Anyway, I have had a couple conversations with people in the Real Estate industry that didn’t know about this requirement. I never think about it because it’s the law and I have been dealing with it for awhile; it’s just the way it is.

Every now and then I run into a situation just like this, and realize that I need to share the information because it isn’t well known to the “non-finance geek” population.

Sometimes, this blog just writes itself. Except for the typing part…

Do you have any questions related to buying a home, and the processes and timelines involved? Feel free to ask on the contact page, leave a comment below, or give me a call at 503.799.4112

Thanks for stopping by!

Buying a home | The Time originally appeared on home loan ninjas on September 23, 2011.

I have been party to quite a few FHA home loans in Oregon and Washington since 2005.

It’s not always a party though.

There are a few issues I have seen repeatedly surface in the appraisal phase of the process which are “frequent offenders” with FHA home loans in general, and sometimes to Oregon & Washington in particular.

FHA home loans – appraisal requirements

The number one issue I have seen come up in the appraisal report is the lack of what’s called a “vapor barrier” in the crawlspace. This is frequently accompanied by the number 2 issue, which is that, quite often, the required 18 inches of clearance in the crawl space does not extend from one end of the foundation to the other. There may be 18″ of space at the center of the house, but it may only be 9″ at the foundation. Both of these issues MUST be repaired BEFORE the appraiser can issue a final report, which is required for your loan to close.

In Oregon and Washington we have a good number of older homes, and it is quite understandable that many of these homes do not immediately meet FHA home loan requirements in their original condition. In some cases, some updating is needed, and that’s normal.

Something else that I have noticed is roof vents. More specifically, the lack thereof.

I have had a few borrowers put offers in on homes that were renovated by investors during the boom years. Many of these “flipper” homes fail to meet some minimum standards, and a big one is the “frequency” of roof vents. I can recall one instance in particular where a client bought a home in Gresham with an FHA home loan. The house was a one-level, 900 square foot home. The client had to install 2 additional roof vents in order to close the loan. Another issue with flipper homes is that some of the “bedrooms” don’t have a closet or a window.

There is another issue though; one that I cannot believe is ignored as much as it is when listing houses, especially in our area and the popularity of FHA home loans.

It’s pretty simple. We have a lot of trees in the Pacific NorthWest. We also get a fair amount of precipitation.

Well, a funny thing happens when the two get together on a roof with little sunlight:

ROTTING

Generally speaking, appraisers will not overlook a rotting roof. Double that sentiment for an FHA home loan. And since we’re in the NorthWest, they are probably already looking for it. No FHA appraiser will sign off on a house with a rotting roof. Not anymore.

I would love to see a day when once a house is going to be listed, any tree debris is cleared from the roof and the roof gets cleaned. However, this is unlikely.

So, there you have the top few issues I see come up with FHA home loans and the appraisal process.

If you still have questions about FHA home loans, or financing Real Estate in Oregon and Washington, please feel free to email at obi-wan_shinobi@homeloanninjas.com, call me at 503.799.4112, or hit me up on Facebook, Twitter, or Google+…I try to be easy to reach :-)

And of course, if you are in the areas surrounding Portland, OR and Vancouver, WA then…

You may also find this post helpful:

FHA home loans – the basics

Please feel free to comment below. What appraisal issues have you experienced?

FHA home loans – appraisal issues originally appeared on home loan ninjas on July 27, 2011.