Why are appraisals so low?

Are appraisers the enemy?  It sure seems like it to some buyers and sellers who need a sufficient appraisal value to qualify for a mortgage or support a selling price.   In the last few years appraisers have taken a much more conservative approach to judging the market and assessing market direction and this often impacts what gets on the document delivered to the bank.

Here are a few things to keep in mind before you get an appraisal:

Appraisals are different than home inspections.
Buyers often treat these the same way but they have different purposes.  Because an inspection educates buyers about the condition of the home, it's a useful tool to help appraisers understand what is working in a house.  Make sure you review it carefully before your appraisal.


Will a tidy home increase an home's value?
Short answer, No.  A clean home can increase buyers offers and final sale price, but there is no evidence it has any impact on appraisers.   They are looking for specific items, working appliances, foundation issues, square footage and are use to looking past the clutter in most homes.



Should you only buy a home if it is appraised for the sale price?.
An appraisal does provide buyers with  useful information but remember, the primary client is the lender.   They need to be conservative to make sure the lender is not caught lending more than a house is worth.

If you plan to live in a house for a few years take the time to figure out what that is worth to you. Sunny windows, a good layout , the shady side of the street, all these things are often overlooked in appraisals.  If a home fits your needs and offers unique personal value, you should be willing to pay for that up front, even if the bank doesn't value these aspects - you have to live with them, not your banker.

You can't impact appraisers' valuations.
Mostly true, with a couple exceptions.  It is all about the comparable home sales in the neighborhood.  It is important for you to help them understand how your home differs in terms of location, and features that are not always obvious.  Help them understand what you know about specific comps.

Is it Time to Invest in Rental Property?

Once statistic we follow closely here at Owners.com is the ratio of Rental cost to home ownership cost. More than any other yardstick this tells buyers if there is a market out there to support the money they are spending to buy a house. In markets like Southern California's inland empire, homes can be bought and rented out at a positive cash flow right away. Or if you decide to sell after buying, you know that there are renters who can afford to trade renting for buying.

One fun resource is Hotpads.com which compiles a rent / buy heat map allowing users to compare the rental markets to buying markets.

The Zillow recently chimed in with an article about what makes a good investment in real estate.

Where ever your market may be, it is a good idea to investigate rentals before you sell or buy. They often are the key to the current prices.

Big Money Backs Housing

Are the big funds betting that housing is coming back in 2012? Recently firms including Caxton Associates LP, SAC Capital Advisers LP, Avenue Capital and Blackstone Group LP have been buying up housing related assets and even Goldman Sachs has turned around their opinion of the 2012 housing prospects as reported recently in the Wall Street Journal.

This interest comes on the heals of a NAR (the National Association of Realtors) report in December that said sales of previously occupied homes in the U.S. rose 4% in November from October, topping expectations. And inventory of previously owned homes listed for sale fell 5.8% to 2.58 million, the lowest level since May 2005.

If the market have not turned around many experts agree that they near the bottom: "The housing-price bottom is probably in sight," Goldman said in a December 15 report. Housing prices might decline by 3% next year before beginning a rise, Goldman says. The bank predicts gains of 30% over the following 10 years, not taking inflation into account."

For long term buyers this may be finally time to act.

5 Steps to Before You Sell in 2012

With so many homes on the market, now is the time to plan your 2012 campaign to sell your home starting with these five key steps. So plan a couple hours before January 1st rolls around to get a head of the game for your 2012 sale.

1. Study the local market:
Who is your home right for? Your first step is to ask what is your neighborhood's best selling point? Is it a good area for a young couple or a retirement option for empty nesters or is it best for families with school age kids?

Think about the likely buyers and rewrite your listing copy with them in mind. No home is right for everyone and the more you can let your target audience know why this location fits their needs the better off you are.

2. Get to the point:
Don't bore buyers! Headlines should be five words long. Now that you can picture your possible buyers, write a headline that helps your house stand out:

• 3 Bedrooms near the Park
• Family home in great neighborhood
• Starter home with great kitchen

3. Don't forget about offline.
It may be old school but simple one page brochures still work. Use the template we offer on Owners then get ready to paper the town with your home for sale sheets. Try some non-traditional places including nearby apartment complexes. Renters in your neighborhood are a great pool of potential buyers who know the area and very low interest rates may be ready to buy.

4. Don't forget about the Realtors.
Even if you don't want to hire an agent to help you sell your home, remember, Realtors represent a lot of buyers. Create a brochure just for them that looks like the ones you find handed out at Tuesday showings, that is the day Realtors connect with each other to show new listings.

You may even sweeten the incentive by offering 3.5% to a Realtor who brings you a buyer. You'll stand out from the rest of the 3% offers and you'll still save big by not hiring a traditional seller's agent. The best way to accomplish this is to list your home on the MLS when you are ready to sell. But get prepared now!

5. Photos are very important.
Your lead photo is critical. Take great image of your home - try shooting it from ground level to help it stand out. You might even hire a professional photographer, or have a friend who is good with the camera help you see your home from a different perspective. All listings are built around images and investing time getting good shots will attract more buyers.

Planning pays off. Use this time to get prepared and you'll hit the ground running when the selling season comes around.

Buy a Home, Get a Visa?`

Can foreign investment help revive the US housing market? That is the plan by Senators Charles Schumer (D-N.Y.) and Mike Lee (R-Utah). In a bill before congress foreign residents making a housing investment of $500,000 cash or more would be offered a residential visa for the US.

Given the relative weakness of the Dollar and lower housing prices, US residential real estate has continued to be popular with foreigners who have $82 billion invested, up 24% in the year ending March 2011 according to the National Association of Realtors.

Adding the value of a residential visa only sweetens the pot as an investment option to be consider. In a globally uncertain economic environment, the safety of long term US real estate may entice even more off shore money to find its way on to main street.

Should you list on Realtor.com or the MLS?

Sellers know they need to reach as many buyers as possible. But what is the right way to do that? The most popular options are listing on Realtor.com - the massive national real estate website, or listing on their local MLS - But which to choose? The MLS and Realtor.com are similar but different; here is a short course on what they do, and who they are right for.

Realtor.com is best for sellers who absolutely only want to sell to buyers who are independent - those buyers who are not represented by an agent.

An MLS listing is best for sellers who are looking for any buyer, both independent as well as the 80% that are represented by an agent.

Here is why:

Realtor.com is a huge national website that primarily reaches individuals all across the country searching for homes. As the largest real estate website it reaches a very broad group of buyers. Most brokers do not search Realtor.com, instead they rely on their local MLS network to find homes for their clients. When you list on Realtor.com you are required to specify how much commission you are willing to pay a buyer’s agent. The standard is 3% but most FSBO minded sellers offer the minimum of 1% which guarantees that only individuals without agents will contact you. If you strike a deal with one of these buyers you will end up paying zero commission to agents.

No Commissions! I want that you say, but there is a catch: 4 out of 5 (or 80%) of all buyers are working with agents, so it well could be that the buyer who wants your home the most has an agent, do you really want to ignore them? Often it is much better to have more offers, or any offers and save 50% of the commission then have no offers at all.

This is where the MLS comes in. Agents look for homes for their clients exclusively on their local MLS. If your home does not show up on it you will not be seen by the majority of buyers. The bonus is when you list on the MLS you are automatically listed on Realtor.com also, so you still get access to all the independent buyers too.

The goal for most sellers is to get the best net offer, if that's one with a commission or one without it shouldn't matter, only how much money ultimately ends up in your pocket. If you're willing to offer up to 3% commission to attract buyers with brokers and expand your possible number of offers, then the MLS is the right choice.

Should an Agent Represent Both Parties?

Dual Agency - or the situation of one agent representing both the buyer and seller - comes up now and then, often when an agent knows both parties or people are trying to save some money, but is it a good idea?

Can one agent properly represent the interests of both buyer and seller and stay impartial?

Our friends over at Imnan asked the question recently and got a range of opinions from the expected Agent answer that as long as you are honest about conflicts it is fine to the more direct, Buyers do not have the same interests as sellers and even if you represent yourself you are better off then using just one agent.

What do you think?