Everett Mortgage On Line

Appraisals are taken from Wrong Point of View

A major factor in why the market of homes for sale in Everett is so soft is the point of view of the appraisal. I think that the new HVCC appraisals will force a lowball approach to appraisals. If a willing buyer and a willing seller make a price that is the sales price. When many buyers and sellers agree to prices that is a market.

HVCC is the Home Valuation Code of Conduct. And it is a political rule made by a political person for political gain. It is delaying the recovery of our economy in its own not so small way.

The HVCC appraiser is hired from a risk adverse point of view. The lender wants no risk so he induces or even orders the appraiser to produce lower value appraisals. With a market that was normal or rising that would be ok. It might provide a check to speculation. That would be providing there was many lenders in the market and we had a free market. Something we haven’t had for a long time. Here is what happened to me just last week.

I recently spoke to a captured appraiser (one working for an AMC (the lender) not the buyer or seller) at a local watering hole. She was upset that the real estate agent had worked her over trying to get the appraisal increased by about 10%. She had valued the home for $335,000 and he said it was worth the freely agreed upon price of $365,000. She had included 2 foreclosed homes in the three comparables in the appraisal and they had driven the value down. Remember a willing buyer and seller agreed to $365,000. Her point of view was the buyer could be paying $35,000 too much.

Well she doesn’t set the market and that is not her business. The appraiser should only report the market not set it. The appraiser and by extension the lender is setting the market. Remember the lender ultimately doesn’t have to make the loan.

Many real estate professionals think the HVCC idea isn’t working. I think the HVCC appraisal has depressed the market of homes for sale in Everett. They have unnecessarily depressed the prices and perhaps prolonged the economies recovery.

If the appraiser is hired by the buyer the lender can always say no and not do the loan. So the argument that the lender gets an unbiased appraisal is simply wrong.

The National Association of Realtors says nearly one in four of its members has reported clients losing a sale due to appraisals. The National Association of Home Builders, meanwhile, said low appraisals were sinking a quarter of all new home sales and argues it’s not fair to compare distressed properties to brand-new homes. To which I wholeheartedly agree.

Part of the problem, critics contend, is that many real-estate appraisers are now hired under new industry rules. In some cases we have seen low cost appraisers hired from outside the area coming into areas where they don’t have market knowledge.

The HVCC rules are designed to limit conflicts of interest that can bias an appraisal, the rules bar mortgage brokers from ordering appraisals themselves, forcing them to do so through a mortgage lender. But the lender is a party to the transaction. The lender is risk adverse and will always lowball any transaction if they can. It is the nature of bankers to ask for more collateral. The appraisal was supposed to be independent from everyone in the transaction. By allowing the lender to hire the appraiser it distorts the value.

Nationwide an average of 40% of all sales were foreclosures. Foreclosures are at an all time high because of many factors outside the scope of this article.

Foreclosure sales should not be used as a factor in an appraisal for new homes or well maintained owner occupied homes. Right now it’s like there are 2 different markets for homes for sale in Everett. Investors and fixer uppers who buy the foreclosures and everyone else who buys the new/well maintained homes.

So right now the point of view of an appraiser and not a willing buyer ans seller sets the market value of homes for sale in Everett.

Jim Johnson and comments are always welcome.

Everett Mortgage on Line.

Some Planning will Help Find the Right School

I had a client ask me about schools and just how to pick the right one. Schools vary so when picking a home for sale in Everett you should do some homework first if a particular school system is important.

So what is the best way to find the right school? Let me state for the record I am not a school expert.

Well first you need to define what is right for your children. Most schools are good at most things but some are better than others at certain things. If your children want or need more math or science or something in an unusual vein (drama, arts, etc) the task gets even harder. In these cases what you want may only come from a specific teacher and that is beyond the scope of this article.

If you are new to the area this will take some time and effort but it is a lot easier than it used to be. Because some school districts are more highly regarded the price of a particular home for sale in Everett may stretch your budget.

I know of 2 web sites that can help you pick the right school. Please know that nothing takes the place of actually going to the school and meeting the teachers and student body.

The first web site is the Washington State School Report Card Web Site run by the Washington State School Superintendent’s office. This site provides the Washington Assessment of Student Learning test scores for every PUBLIC school in the state. The site allows you to compare test scores with other schools of similar size and composition. It also provides teacher and demographic information about each school. I noticed that the site only covers grades 3 through 10. I don’t know why 1^st, 2^nd 11^th and 12^th grade are not covered. This site is located here: reportcard.ospi.k12.wa.us.

The second site is www.greatschools.org. Great Schools is a nonprofit organization that rates schools on a 1-10 scale based on test results compared with other schools in the state. It gives you a quick and easy way to compare schools in a neighborhood. They cover public and private schools. I found that to be a very nice inclusion..

So when shopping for a home for sale in Everett you can now judge the school district.

Jim Johnson and comments are always welcome.

Everett Mortgage on Line.

Expect No Recovery for Homes for sale in Everett

If you are expecting a recovery of the market for homes for sale in Everett don’t hold your breath. The MSM (main stream media) keeps on drinking the Kool aid but I’m not. A panel of economists at the International Builders’ Show in Las Vegas agreed broadly on the outlook for the housing market and economy. Both, they said, had turned a corner, but there are slim prospects for a swift rebound. As I have stated many times before there will be no recovery without jobs.

After the news that home sales UNEXPECTEDLY dropped like a stone in December I don’t know how an economist like Davis Crowe of the National Association of Home Builders (NAHB) can say, “It won’t be a strong recovery, but it will be a recovery,” Granted he has to remain positive because of his position but let’s get real. There is that word unexpectedly. I would love a job like his. It’s like the weatherman you never have to be right.

Anyway Mr. Crowe had that to say after the December home sales were reported. Sales of new homes fell unexpectedly in December, capping the industry’s worst year on record and fueling concern that the housing market turnaround could falter.

Last month’s results were the weakest since March and were only 4 percent above the bottom last January. The data showed the housing recovery remains limp despite newly expanded tax incentives to spur sales. Many in the industry, however, expect sales to pick up as the April 30 deadline for the tax credit nears.

Mr. Crowe has this forecast for homes for sale in Everett. He claims sales of new and previously occupied homes to weaken after tax credits for homebuyers expire in April. But 2010 sales of new homes will be up by more than one-third, he said, and almost 7 percent higher for resale’s. As for prices on homes for sale in Everett he says  home prices should remain stable going forward, though some cities may still see some slight declines in the coming months. Personally I don’t see any recovery without JOBS.

Last month cash out refinancing was almost nonexistent. Even with mortgage rates at historic lows no one is taking advantage of them. I see 2 reasons for that. One reason is tight credit rules making refinancing so difficult as to turn off many borrowers. I had a borrower with a 718 credit score but we were unable to refinance his home. This is a loan that makes great economic sense but will not happen because of unreasonably tight rules. Another reason is plain fear, the uncertainty of the future and no JOBS.

NAHB has a consumer confidence index and it fell to 15. The index reflects a survey of 504 residential developers nationwide. Index readings below 50 indicate negative sentiment about the market.

I expect the market for homes for sale in Everett to remain flat for the foreseeable future.

Jim Johnson and comments are always welcome.

Everett Mortgage on Line.