Upcoming free (& non-promotional) Home Buyer Education Classes
Saturday, May 30, from 12pm-3pm
Vancouver YMCA, conference room
11324 NE 51st Circle, Vancouver WA (corner of SR500 & Gher Road/112th Ave)
Saturday, June 6, from 9am-12pm
Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)
…if these dates/times don’t work for you, we have others. Check out the website for more class dates, times, and locations. PLEASE always check the web site www.learningtobuyahome.com ; for any changes regarding the classes!
Remember…with reservation…we will throw in lunch, or dinner! 😀
This weekend was one of change for my family….our oldest daughter moved out this weekend. She moved out with her boyfriend to a cute apartment close to their work locations, and that would accept their pets. The rent for that apartment…a 1 bedroom…is outrageous (in my opinion) though my daughter tells me that it is really reasonable. Wow!! Rent prices are crazy!! …and openings are filled quickly? I guess I don’t understand paying that much in rent for a 1 bedroom apartment…..my mortgage isn’t that much more than their rent!! Yikes… I am thrilled for them as they start their life on their own together, but at the same time…yeah, my mommy heart is breaking. On the bright side, her apartment is only a couple of blocks from my office, and though I have promised not to stop by all the time… I didn’t promise not to stop by at all. LOL
So, as you know I like to teach by example… So this week we are we going to talk about appraisals. I always say in the class ‘not to start packing until the appraisal is in’ and that is because the appraisal is really the last big hurdle to buying a home…..kind of… I should say it is one of the biggest hurdles in the home buying process. Why?
The inspection is ordered, and paid for by you as a way to determine the condition of the home you want to buy. The inspection is for you. The appraisal is ordered by the lender, and paid for by you, as a a way to determine the WORTH of the home you want to buy. The appraisal is for the bank. You (and your agent) should be at the inspection, but none of us will be at the appraisal as we aren’t supposed to talk to the appraiser…”they’re” (whoever ‘they’ are) are afraid that we might try to ‘influence’ the appraiser. The laws for appraisers changed a lot in 2009, after the housing market crash. The housing market crash was blamed, in part, on to a ‘bubble’ of home values being too high. The appraisers were blamed for pushing values up, but the appraisers said it wasn’t their fault…it was the fault of agents & lenders for ‘forcing’ them to have their appraisals come in that high. The government then decided since everyone wanted to play the ‘blame game’ that lenders would no longer have a ‘list’ of appraisers to call for appraisals. It is a lottery system….the buyer pays for the appraisal, the lender puts the order in, and like a bingo wheel, whoever comes up is the person who comes out to do the appraisal. Sometimes you get Captain America, and sometimes you get Hitler. It’s like going to two different churches…technically they’re supposed to work off the same book & instructions, but you get two different interpretations because it’s how that particular person interprets that book & instructions. It is the same thing for appraisers…technically they’re supposed to work off the same guidelines, but it depends on how that particular person interprets those guidelines…and his/her mood of the day.
For example… I have a buyer purchasing a 3 bedroom home with 2 1/2 baths near the mall. Cute backyard, 30 year roof, A/C, hardiplank siding, and a one car garage. He is purchasing the home for $212,000….yes, a great price. No worries on this one….inspection is clean, and we move forward to appraisal. An appraisal can take 10-20 days depending on how busy the appraiser called out is, but this one came back in about 10 days….for $190,000!!! Yes, you read that right… $22,000 less than purchase price. ugh…. we were all blown away on this as a low appraisal was not expected here at all. Is the home worth more than the $190,000? I think so, the sellers agent thinks so, the seller, and the buyer also think so. My client has been looking at homes for awhile, and at the $212,000, this is the best home for the cheapest price we have seen. There are even comparable homes to show value out there. In fact, about 3 weeks ago I helped sellers sell their home for $185,000….and that was an attached (on both sides) townhome, and this is is a detached home. However, it is the appraisers opinion that matters….So what happens now?
The bank will only loan a buyer either the purchase price, or the appraisal value…whichever is less. In this particular case, the lender will only loan my client $190,000, to buy that home. If the home appraises for less than purchase amount, I have to send a copy of the appraisal to the sellers agent and request the seller to come down in price to sell my client the home. The seller has the choice…they do not have to come down in price, and the deal can die. For this client, the seller can not come down to $190,000 as he owes more than that on the home, and doesn’t have the money to bring in to closing. The deal is dead, and that home will become a rental for at least 6 months since that is how long it will take the low appraisal to drop off the home.
What happens if the home appraises high? I have another client who just had this glorious thing happen…. The home they are buying just appraised for $11,000 MORE than they are buying it for! 😀 Yay!! …and the seller will never know. The seller only receives a copy of the appraisal if it comes in low.
Appraisers can also determine work needed on a home. They are not inspectors, but sometimes an appraiser can call out repairs that think are needed to a home. If an inspector calls out repairs (and they will), that is between you and the seller. The seller may be willing to do some, all, or even none, of the repairs, and that is between the buyer and the seller. Again, the inspection is for YOUR knowledge. If an appraiser calls out a repair, it now becomes a ‘lender required’ repair….meaning if it doesn’t get done, you don’t buy the home as the lender will not finance it. Some things I have seen an appraiser call out for repair include: black berry bushes in a back yard, a man-hole cover in a front yard, peeling paint around windows/trim, a fireplace insert, a roof needing certification (or replacement), water heater needing raised up or needing earthquake straps, and broken windows. Again, it just really depends on the appraiser. I have seen appraisals come in over purchase price, but with half a dozen (now lender required) repairs, but I have also seen appraisals come in with no repairs that I was certain would be required. With appraisals, it is really a crapshoot….you don’t know who you’re going to get… Captain America, or Hitler. So again, never start packing until the appraisal comes in. Just remember that the appraisal can’t be ordered until you ok it with your lender. You, the buyer, will get a copy of the appraisal. As your buyers (or sellers) agent, I will not get a copy of the appraisal unless it comes in low. As an agent….no gnews…is good gnews… 🙂
Once your appraisal comes in we are about 2-3 weeks from signing, closing, and keys. Please remember that until the home is recorded in your name at the courthouse anything can happen, so please, ask questions of your lender, and your realtor. Please don’t go buy appliances or furniture during this time. 🙂
One last thing you need to remember is that a real estate agent is not a sales person. It is not our job to ‘sell’ you anything. We are assistants, advisers , guidance, and help. You should not feel as if your agent is trying to sell you a home, or anything else, our job should be to help you in getting the home you want. This being said remember that you do not get T-Bone steaks for the price of hamburger…Look ONLY at homes within your budget. ALWAYS ask questions, and expect answers without a lot of lingo. I was always told that if you can’t explain something in a way that the other person can understand clearly, it is because you don’t understand it yourself. 🙂
Information is power, and I hope that I am able to help you. Good luck, and as always…May the odds be ever in your favor out there…. If you are looking for a real estate agent, I would love to be able to help you.
As always….this is just a quick overview…. please remember that your agent, and your lender work for YOU. You drive the bus…we are merely GPS to help you get to your goals. Like the classes, this weekly blog email is to help you with your homebuying adventure. The goal is to be informative and non-promotional. 🙂 We are, however, hoping you will call and want us to help with your adventure.
If you have any questions about this, or something you have heard…or if you would like me to help you with your homebuying adventure, please call, email, text, or facebook me anytime. I am, as always, happy to help!
Thank you again for your business and your referrals!! …and thank you for referring these classes to your friends, family, and co-workers.
. ..disclaimer…if you have already purchased a home, or would no longer like to receive these emails, please let me know and I will be happy to remove you from any further mailings…
Next Week: Mortgage vs Rent…How does that work?
Last Week: Home sale failed…but why???
Have a great day, and I will talk to you soon,