Upcoming Free (& non-promotional) Home Buyer Classes:
Monday night, September 12th , from 5pm-8pm (ish)
Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)
Saturday September 24, from 11am -2pm(ish) Vancouver YMCA 11324 NE 51st Circle, Vancouver WA (at SR 500 & Gher Road/112th)
If these class dates and/or times don’t work for you, please let us know. We understand that you have lives, and families, and work. We will work something out that works better with your schedule. Just let us know….
….we also have home seller classes available too…link on left on website
Remember…with reservation…we will throw in lunch, or dinner! 😀
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Good evening….
It is Saturday evening as I type this. I am hoping to get it out to you tomorrow as it would be nice to be on time this week. 🙂 However…no promises! It’s been a crazy couple of weeks with school starting for our youngest daughter, the house we are building, and of course…real estate. The market slowed down some during the month of August, and as we slide into September. This is pretty common as many of us have been dealing with school supplies, school clothes, last minute vacations (I wish!), and general gearing up for the school year and end of summer routines. This is good news for a lot of us as it’s been so hectic, and good news for the market. We still are having an inventory issue of homes for sale (that being said…know someone thinking about selling?). There are some areas where we are seeing more homes for sale, but that lower 200,000 price range is still tight. As we come into fall & winter…remember…that’s the best time to be a buyer. 🙂
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. The appraisal order goes into some type of system that appraisers choose appraisals from. 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. The inspector is hired by You to determine the homes condition…the appraisal (even though it’s paid for by you) works for the lender to determine value.
For example… Last year, I had 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 was purchasing the home for $212,000….even for 2015, yes, this was a great price. No worries on this one….inspection was clean, and we moved forward to appraisal. An appraisal usually takes 10-20 days (not right now though!) 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. Was the home worth more than the $190,000? I think so, the sellers agent thinks so, the seller, and the buyer also think so, and there were comps to show it. My client had been looking at homes for awhile, and at the $212,000, this was the best home for the cheapest price we had seen. There was even comparable homes to show value out there. So then what happens?
The bank will only loan a buyer either the purchase price, or the appraisal value…whichever is less. In this particular case, the lender would 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 could not come down to $190,000 as he owed more than that on the home, and didn’t have the money to bring in to closing. My client was purchasing the home using a conventional loan, so in this particular case, he was able to switch to a FHA loan, and we had the home reappraised with a new appraiser… 10 days later the NEW appraisal (with a different appraiser) came in….at $210,000! Two different appraisers, 10 days apart, and $20,000 apart in value. We were still $2000 apart however as the purchase price was $212,000. This was easier to deal with… the seller was paying $5000 in closing costs, so we reduced that to $3000, and dropped the price to $210,000.
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, peeling paint around the the windows garage, and/or gables, lack of carbon monoxide detectors, 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… 🙂
Above I mentioned that appraisals take about 10 days or so once ordered, but we are in an appraiser shortage. Yeah… we don’t have enough appraisers right now for all the appraisals that are being ordered. They are taking WEEKS to get out to the home to inspect it, and then weeks to turn it in. An appraisal can take 3-5 weeks right now…and that adds time to purchase time. I have a client that got an offer signed around mid August…and the plan was to close early October. Um…yeah…that WAS the plan…. we can’t get the appraisal done until 10/12, so now we are looking at closing the end of October instead. Usually a purchase period (from accepted offer to keys) is about 45 days, but right now, we are planning more on around 60 days. A buyer can pay more for an appraisal to ‘rush’ it, but that is between you and your lender. The appraisal time periods are crazy and frustrating right now. Just be prepared that extra time may be needed because of it.
Once your appraisal comes in we are about 2 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. Surprisingly, real estate isn’t really about houses, but more about the relationships that we build along the way. 🙂
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…. AND 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…. again…and I can’t say this enough…please remember that your agent is NOT a salesperson, and should not be acting like one. Real Estate is not really about houses, it is about relationships. 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 home 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 home 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…
Upcoming Topics: Multiple offers, what are sellers looking for…. or Home inspections & you…
or…. Escrow Accounts, and what they do
Last Week: Time is of the essence….deadlines in real estate.
Have a great day, and I will talk to you soon,
;-D
