Three Tips for A Successful Appraisal

Tuesday, January 31, 2012

The appraisal process has been a source of frustration for everyone involved in a real estate transaction over the past 3 years.  We get appraisers from Novi appraising a property in Sterling Heights or someone from Davisburg doing an appraisal in Birmingham.  Some specific appraisers and appraisal companies (who I will not mention) seem to just do a poor job every time.  How do you exercise some control over these issues?

We would prefer an appraiser that has some solid experience – someone who has only been licensed for a year or two may not have the same competence level as a seasoned professional

An appraiser should have geographic competence – this means they should have a strong knowledge base of the market the subject property is in.  I have found we get the best results when the appraiser lives in the same area as the subject home is located

If you feel a specific appraiser has done a poor job in the past don’t use them again – you should keep track of the appraisers and appraisal companies that handle each transaction and note if the work was good or not.  Sometimes an appraisal will come in low but it’s well thought out and documented.  In that case there isn’t much to complain about.  However, if the appraiser makes bad comp choices or adjustments you don’t agree with then you don’t want them working for you

Here are my three tips to a more successful appraisal:

1)      Ask the appraiser about their experience – when the appraiser contacts you to schedule an appointment to see the home ask them how long they have been licensed.  You want someone with adequate experience and a track record
2)      Ask the appraiser about their knowledge of your market – if the appraiser lives in the same general area as the property it’s more likely that they have the knowledge of the area that’s required to properly value the house
3)      Don’t allow too much time to elapse between contact and appointment date – OK, this is just my own opinion, but, if the appraiser calls you on a Monday and you schedule the appointment for the following Saturday then the appraiser has a lot of time to come up with a pre-conceived notion of how much the home is worth before they even see it.  They may have the report pretty much done and comps selected before you have a chance to meet them and provide your own sales data

Please be gentle with these questions!  We don’t want to set a sour tone with this person.  Start by saying that you just want to make sure the person doing the job knows the market and is experienced.  “Where are you from and how long have you been doing appraisals?”

If the answers you get to these questions make you nervous then you have the right to tell the appraiser that you want someone else assigned.  Yes, that’s right!  You can decide if you are happy with the person assigned and if not get someone else.  The appraiser will have to report back to the management company and they will assign the job to a different appraiser. 

Take control of the appraisal process and you’ll get better results!


Tax Cut Extension Raises Mortgage Rates

Wednesday, January 25, 2012

Your Federal Government is at it again, robbing Peter to pay Paul.  On December 23rd Congress and President Obama gave the housing market a black eye when they decided they could raise mortgage rates to pay for a two month extension to the payroll tax cut that has been in place for the past year.  How did they do that?

Well, as you all know, the government is acting as conservator to Fannie Mae and Freddie Mac (commonly known as the GSE’s) in the wake of the housing meltdown and so they can make up the rules as they go.

What they did was to increase the guarantee fees the GSE’s charge to lenders on loans they make.  The increase amounts to .1%.  This increase stays in place until October 2021 – 10 years. It doesn’t sound like much but that increase will translate to a .125% to .25% increase in the rate of every new conventional mortgage taken out over the next 10 years! 

Extending a payroll tax cut for 2 months increases mortgage rates for 10 years?  I don’t know about you, but that doesn’t sound like a good trade off to me.  A .25% increase in your $200,000 mortgage over 30 years amounts to extra interest costs of $7,615!!  Sounds like a small change but it ends up costing everybody who gets a home loan over the next 10 years a lot of money.  Ouch . . .

The real issue here is that the Federal Government has decided it can use money made on new mortgage originations to pay for general government spending.  That is just wrong.  If they said they were going to increase mortgage guarantee fees to pay for a homebuyer tax credit I’d be all for it because the extra mortgage cost is being used to help bolster the housing market and that would make sense.  Paying for a 2 month tax cut with 10 years of higher mortgage rates does not make sense!

Another reason to contact your local congress people.


FHA Loan Limit Change Reversed / Great New Jumbo Loan Program 10% Down

Tuesday, January 17, 2012

FHA Increases Mortgage Loan Limit!

Last Month FHA announced a reduction in the mortgage loan limits on FHA mortgages around the country. The loan limit for Oakland, Macomb and Wayne County, Michigan were reduced from $297,500 to $271,050. That was just reversed and the limits will remain at the old levels of $297,500 effective immediately!

New Jumbo Loan Program Available with 10% Down!

Jumbo mortgage loans (those mortgages that exceed the conventional loan limit of $417,000) had really dried up over the past 4 years but just recently we’ve seen new interest in making these loans. Existing loan programs have been requiring a 20% down payment.

This exciting new program will make a Jumbo Loan with just 10% down and no Private Mortgage Insurance (PMI)! Here are the details:

- Max loan amount of $850,000 with 15% down

- Max loan amount of $750,000 with 10% Down

- Minimum 740 credit score

- No monthly PMI paid by borrower

- 30 Year Fixed and 15 Year Fixed loans available

- No First Time Homebuyers (must have had a previous mortgage)
This type of financing is exactly what we need to jump start the higher end home market! Please contact me for more information on how this new loan program can help your clients buy the house of their dreams!


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