I have long maintained that the housing recovery is premised upon the distress inventory clearing out. The distress in foreclosures and short sales is not helped by lenders unwilling to either re-finance or modify loans of qualifying homeowners.  If the homeowner can prove income, why shouldn’t the lender re-structure the loan to accommodate a monthly payment that works? It’s a win-win. If my neighbor’s loan was an adjustable rate and re-sets from 5% to 10%, and the payment becomes a tidal wave of debt, a foreclosure might begin. Ultimately, my home’s value will decrease as a result of that neighbor’s distress. President Obama, in his State of The Union speech a few weeks back, said, “I’m sending this Congress a plan that gives every responsible homeowner the chance to save about $3,000 a year on their mortgage, by refinancing at historically low interest rates. No red tape.”  Clearly, the devil is in the details. A huge impediment to refinancing is the lender’s appraisal. . In the scenario President Obama outlined, appraisals can =not= have any role in the refinancing process other than a place mark in the file. It can not determine value. If the lender  needs to restructure or modify an existing loan to reduce the  interest rate or extend the years…if they can create a more stable housing environment and avoid millions and billions in write offs and losses….then that would be the recovery we have been pushing for. A 30-year fixed rate mortgage under 4% is available today. Why not get started?

Here ye, here ye! 

The national economy continues to gurgle and wallow in less than absolute terms.  Media talking heads and would-be politicos jockeying for survival keep shouting the story over and over. Who is to blame? Certainly heads should roll, our leaders run out from office, & company CEO’s kicked out of the boardroom for such dismal whining and hedging.  But why does it seem such a different story at the local level – why are the restaurants packed with happy smiley people, and the stores, (especially TARGET), bustling with cars and people there to spend, spend, spend?  I think it’s because we have conformed to a new reality of what the economy is all about. There are enough employed folks, in the ranks out there working harder and longer as ever, because the corporate model has figured out what works beautifully for them. But, not so great for the individual worker and definitely not encouraging when talking about the Unemployment Rate.  Here is the new reality:  you are working a job that should be employing 2, maybe even 3, different people.  Profits are fabulous, all that cash is SO GREEN, and the corporations are strong and solid.  Here is my suggestion to create jobs and see a huge reduction in the unemployment rate: 

American Corporations, please Hire American workers. 

Not to create jobs for jobs sake, but, to allow your existing brain trust, your current staff and workforce, to more efficiently and accurately handle their jobs, rather than downsize and allow attrition to make 2 former positions in to 1 position.   That’s my solution. This weeks announcement that BofA will operate with 30,000 less workers only means one thing:  get ready for additional work, stress and unhappiness remaining BofA employees.  Sorry to say.

Do the right thing Corporate!  Hire, hire, hire! And then, hire some more. Help build this country up again!

I recently attended a seminar called “Appraisal Update” sponsored by Sierra Pacific Mortgage and AXIS Appraisal Management. It was a pleasant enough setting, in a large air-conditioned conference hall at a Mission Valley hotel, where our business attire mixed well with the guests hanging by the pool in swimsuits.  In attendance were REALTORS like myself as well as loan officers.  In short, I will outline the relevance of this boring-sounding topic, and lay to rest the myths that are associated with appraisals.

The purpose of the appraisal is to satisfy the lender. Period. The lender assesses the degree of risk to issue a loan on the property based on the appraisal findings.  The lender does not pay for this service, the buyer does. The cost can range from $350 to $650 per property, and is typically collected in advance of the report. The appraisal is required for refinancing an existing property, or a new purchase.

Seasonal trends in sales and pricing in a given neighborhood occur, and appraisers use this historical trending as a guideline. They will interject judgments based on conditions, location specific to the subject property.

If a real estate purchase is all cash, there is no logical reason for an appraisal.  A buyer will have received comps from their REALTOR to allow the buyer to make a well-educated decision to purchase.

Foreclosures and distress sales (short sales) are used as comparable sales = based on =  a percent of total foreclosures in that market or neighborhood.

The purchase price is viable market data: what is the market willing to bear? If a buyer is willing to pay ‘x’, that becomes vital information. As a result, the lender supplies the appraiser with the purchase contract so they become familiar with the price.

Lenders can chose which Appraisal Management Company to align with: the best AMC’s use only local appraisers. These are familiar with the neighborhood in which the subject property is located. This is huge, because if the appraiser is from Los Angeles County, how familiar can they be with San Diego neighborhoods?

Unpermitted space in the home can not be included in the total square footage of the property. Supply copies of permits to the appraiser.

These are the basics to all appraisals:  comparable sales are within the past 90 days; no more than 20% difference in square footage and parcel size; within the neighborhood: no more than 1 mile (urban) and no more than 5 miles (rural) from the subject property. However, if there are no sales found within these parameters, adjustments are made.

It is helpful to provide the appraiser with a list of recent improvements to the property; permits for recent additions; HOA documents and budget; and recent neighborhood sales not on the MLS (i.e.: for sale by owner).

You can appeal the appraisal findings with the appraisal management company.The best influence is with factual data for review that may have been missed (condition; view, location, size).