Appraising the Appraisal Situation
It’s been a packed couple of days here at the California Association of Realtor’s Business Meetings and the information gained is overwhelming. As promised, the following is a brief description of the current efforts to fight this current (to put it lightly) dysfunctional appraisal environment. And when you are done reading this bit of info, we URGE you to contact Members and Senators to 1: Share any “horror” stories you might know of, 2. Support legislation that the Office of Real Estate Appraisals be given the authority to regulate Appraisal Management Companies and 3. Urge them to support future legislation to make appraisals portable if transferring lenders. As for now, read on.
As a result of a settlement between the New York Attorney General and the Government Sponsored Enterprises – Fannie May and Freddie Mac, the Home Valuation Code of Conduct, better known as the HVCC was created. The HVCC has no force of law and was not enacted by Congress nevertheless, because the GSE’s are dominant in the marketplace, the HVCC was effective in changing the way lenders and appraisers do business. The vision of the HVCC was to separate loan officers and brokers and sales agents from appraisers. Good idea in theory. However, as a direct result, Appraisal Management Companies, which act as intermediaries, exploded onto the scene. Yikes! Compliance with HVCC became mandatory June, 2009.
THE PROBLEM Iies in the AMC’s not being adequately regulated. We are not alone here in Lake Tahoe. Across the country, appraisals are being conducted by “out-of-area” and/or not so sharp appraisers and often, the results do not accurately reflect the true value of a property. When inaccuracies appear in the appraisal reports, there are no easy ways in which to make corrections. Everyone loses – home owners, potential buyers, escrow companies, Realtors, contractors, etc. I just learned of a local story (one of many) in which an appraiser discounted the square footage for an entire indoor pool room which included a seating area, sauna, etc. Just took it away. I am sure you have your own stories to tell.
Furthermore, lenders owning Appraisal Management Companies invite conflicts of interest. Think about it – is an appraiser, especially one from out of the area, more likely to appraise to the underwriting standards of their employer rather than that of the market. Are they so restricted by their employers guidelines that they fear losing their job if they don’t give the true value their experience tells them is fair?
Finally, it is important to take a look at the idea of making appraisals portable. Right now, lenders are requiring the preparation of another appraisal even if an appraisal has already been completed for another lender. We have even seen cases where a consumer, in shopping for the best loan, had to pay for more than one appraisal, even in the case where the same appraiser did the work. Perhaps lenders that own their own AMC’s have a financial incentive to require these additional appraisals. FHA require portability, the HVCC allows it – but lenders refuse it. WHY??
Please contact us if you have any further questions and, go back to our first paragraph and make those calls. It’s easy and incredibly effective. Please pass the word and have a great day.
Montgomery Estates sees Improving Sales Activity in South Lake Tahoe
Here it is – straight from the South Lake Tahoe Association of Realtors’ Multiple Listing Services, the first of our studies to compare Year-to-Date (January 1st through April 30th) sales statistics for the past three years.
The news is rather encouraging for the Montgomery Estates neighborhood. The number of closed escrows totaled ten which was slightly up from last year’s nine and soared above 2008’s total of only three. While still below the average and median home prices of 2008, the numbers were definitely up as compared to last year at the same time.
This increase of median and average home prices scored better than the picture presented throughout the overall South Lake Tahoe area. The overall median home price (based upon the average from the preceding twelve months,) appears to have settled during the past six months. These statistics show a median home price of $318,500, down from last year’s $395,000 posted at the end of April.
Following are the ten posted sales for Montgomery Estates during the first trimester of 2010.
2303 Sutter built in 2003 with 2,971 SF sold for $564,500
2341 Cold Creek built in 1974 with 2,703 SF sold for $775,000
1802 Amador built in 1991 with 2,448 SF was a short sale at $400,000
1215 Gold Dust built in 1991 with 2,814 SF sold for $518,000
3100 Jacarillo built in 1982 with 1,400 SF and backing forest sold for $355,000
1157 Early Dawn built in 1973 with 1,120 SF sold for $298,000
1148 Golden Bear built in 1972 with 1,846 SF was a short sale at $350,000.
2384 Cold Creek built in 1977 with 1,832 SF was a bank-owned sale at $351,000.
1701 Pepperwood built in 1969 with 1,064 SF was a bank-owned sale at $214,800.
3025 Lodgepole built in 1996 with 2,578 SF and backing forest sold for $540,000
Let’s all keep our fingers crossed and hope this encouraging news is only the beginning of a stabilizing market. While we are at it, let’s keep those interest rates at record lows and keep those smiles first and foremost.
South Lake Tahoe Learns the New California Purchase Contract
Like it or not, the “old dogs” are learning some new tricks. Beginning April 28th, the California Association of Realtors will be releasing the newest form of their Residential Purchase agreement. This will be the first major revision since 2002. This morning, Gov Hutchinson, Assistant general Counsel and Staff Vice President of the California Association of Realtors, presented a class this morning, April 2nd in South Lake Tahoe through the South Tahoe Association of Realtors. Every page of the eight page contract reflected changes and each page was covered, practically line by line. In attendance were approximately 120 Realtors from the surrounding area. Following the class, many stayed to take a test required to earn continuing education credits.
Significant among the changes were clarifications to timelines. No longer can a deadline fall on a weekend or a legal holiday. While these days can be counted within a timeline, the deadline must be be extended beyond the weekend or legal holiday. For example, if the 17th day of an inspection contingency falls on a Sunday and the following Monday is a holiday as well, the deadline then becomes Tuesday. Another major change to the contract makes it clear that a deposit check can be electronically transferred into escrow without having to go through the hands of the agent. Further changes included: the notice to perform, FHA and VA loans, financing, appraisal contingencies, pest inspections, home warranties and contingencies. There was even language included that addresses whether or not brackets holding up a flat screen tv is considered a fixture or personal property (definitely a sign of the times.)
What do these changes mean to the consumer? Whether a buyer or seller, the greater the clarification in contract terms, the better the protection and risk management. More than ever, a local, knowledgeable Realtor is a valuable asset to the real estate transaction. The next time you find yourself interviewing Realtors, ask them about their continuing education and what they are doing to stay one step ahead of the market trends. You’re going to be pleasantly surprised.
South Lake Tahoe Real Estate Market Update, Oct. 15- Oct. 21
The South Lake Tahoe real estate market showed 13 NEW LISTINGS this past week, up from the previous week’s 7. The lowest priced new listing is $164,500 for 2577 Armstrong, a 3 bedroom, 1 bath with 832 square feet. The highest priced new listing is $1,395,000 for 1321 Wildwood, a 4 bedroom, 3 bath with 3432 square feet. This week’s median listing price is $495,000.
There were 11 homes that went into ESCROW this past week, up from last week’s 7. The lowest priced new escrow is $164,900 for 3713 Montreal, a 4 bedroom, 1 bath with 1020 square feet.The highest pending sale price is $737,000 for 1984 Osage, a 4 bedroom, 3 bath with 3009 square feet. The median pending sale price is $324,000 with and average time on market of 60 days.
This week there were 9 homes recorded as SOLD, one more than last week’s 9. The lowest sale price was $85,000 for 1223 Bonanza #25, a 2 bedroom, 1 bath condo with 985 square feet. The highest sale price was $520,000 for 756 Lakeview, a 4 bedroom, 2 bath with 1706 square feet. The average time on the market (including the escrow period) was 142 days. The median sale price was $314,000.
South Lake Tahoe Real Estate Market Update, Oct. 8- Oct. 14
[SinglePic not found]The South Lake Tahoe real estate market showed 7 NEW LISTINGS this past week, down one from the previous week’s 8. The lowest priced new listing is $185,000 for 1183 Lodi, a 2 bedroom, 1 bath with 864 square feet. The highest priced new listing is $648,000 for 1357 Gilmore Lake, a 4 bedroom, 4 bath with 3406 square feet. This week’s median listing price is $335,000.
There were 7 homes that went into ESCROW this past week, down from last week’s 14. The lowest priced new escrow is $139,900 for 2680 Kubel, a 2 bedroom, 1 bath with 448 square feet. The highest priced new escrow is $1,988,000 for 5 Lighthouse Shores, a 3 bedroom, 2.5 bath with 2996 square feet. The median pending sale price is $399,000 with and average time on market of 102 days.
This week there were 8 homes recorded as SOLD, down from last week’s 14. The lowest sale price was $222,000 for 2319 Sky Meadows, a 3 bedroom, 1.75 bath with 1280 square feet. The highest sale price was $750,000 for 2205 Venice, a 4 bedroom, 2.5 bath with 2467 square feet. The average time on the market (including the escrow period) was 158 days. The median sale price was $610,900.