Displaying blog entries 11-20 of 21
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The Take Away:
Appraisals & why we must sell every home twice!
Every house on the market has to be sold twice; once to a prospective buyer and then to the bank (through the bank’s appraisal). In a housing market where supply is very low and demand is very high, home values increase rapidly. One major challenge in such a market is that bank appraisal. If prices are jumping, it is difficult for appraisers to find adequate comparable sales (similar houses in the neighborhood that closed recently) to defend the price when doing the appraisal for the bank.
With escalating prices, the second sale might be even more difficult than the first. And now, there may be a second issue further complicating the appraisal issue.
The Mortgage News Daily (MND) recently published an article titled Conservative Appraisals Increasingly Mentioned in 2015; Did Something Change?
The article revealed that there was a “flurry” of comments on their website from members expressing concern about…
“…a sudden increase in appraisals reflecting market values well below what had been expected. In some cases the low appraisals had merely required the restructuring of the loan, in others they killed the deal.”
The National Association of Realtors revealed this month that 8% of the contracts that fell through over the last three months were terminated because of appraisal issues.
MND decided to survey their members and ask why this sudden increase in “short” appraisals could be taking place. Here is one result of that survey:
“Almost everyone we spoke to mentioned Fannie Mae's new Collateral Underwriter (CU).”
Collateral Underwriter provides a risk score on individual appraisals which will lead to a ranking of appraisals by risk profile, allowing lenders to identify appraisals with heightened risk of quality issues, overvaluation, and compliance violations. It went on-line on January 26.
Marianne Sullivan, senior vice president of single-family business capability with Fannie Mae believes that CU is not a problem for appraisers. She claimed:
“From an appraiser perspective, one of the lender's responsibilities has always been to review the quality of an appraiser, and they have been using various methods to do that forever. I don’t think appraisers will find this tool to be disruptive.”
However, some think that CU has caused appraisers to become too cautious with their appraised values. One mortgage professional in the MND article explained it this way:
"My personal opinion is that appraisers are being overly conservative in choosing comps because of CU. If CU questions the comps, adjustments, etc., the appraiser would have to do a lot of extra work to justify them. I had anticipated that CU would cause delays because of this extra work, but it seems that appraisers are one step ahead and are being ultra conservative, thus avoiding the extra work in the first place. I haven't spoken to an appraiser about it; this is just my interpretation of what I am seeing."
Ryan Lundquist, a Certified Residential Appraiser in the Sacramento area, agreed:
“One of the unintended consequences of CU may be more conservative appraisals.”
We must realize that, in today’s housing market, every house must be sold twice and the second sale (to the bank’s appraiser) could be the more difficult one.
Thank you to Caitlin Clark of D Magazine & D Home for thinking of us in their recent blog post & QA. We discussed the affect of corporate relocations to the North TX area & how this may affect Frisco's real estate market.
Below is a quick glimpse - For all the Questions & Answers, please be sure to check out the Blog - HERE
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How do you think all the development in and around Frisco will affect the city’s housing market?
It is an exciting time to be in Frisco! The name recognition that comes with the Cowboys is priceless. As we continue develop and draw new employment anchors and employees, that name recognition will keep our great city in the forefront of buyers’ minds. Likewise, the affect we will see from our new corporate neighbors will be profound...
Are there any up-and-coming neighborhoods or residential developments that homebuyers looking in Frisco should know about?
We could talk all day! New home communities include: Phillips Creek Ranch with huge amenities, Lawler Park with creek lots and mature trees, and the gated Newman Village, which has come on strong over this past year. I do caution buyers not to let new build prices or inventory scare you from our market; the traditional heavy hitters in Frisco will always draw interest like Trails of West Frisco, Starwood, Stonebriar, Griffin Parc, etc. Likewise, the Hillcrest & Lebanon area of Plantation Estates, Hillcrest Estates, Cecile Place and others are wonderfully priced, just off 121, and offer amazing schools and amenities. Really, we could talk all day!
Do you have any tips or insight for homebuyers looking to make the move to Frisco?
Sure I do; give us a call!
The best advice I can offer is to get started early. Frisco is much larger than people expect. The city offers such a wide variety of communities, home styles, and amenities that it can be overwhelming for home seekers new to the area. Work with someone to get to know the area, not just the houses. This isn’t just about where you lay your head at night, but where do you work, live, relax, and play – how can your home, community, & city enhance this?
And, if you are relocating from another state, don’t worry, we native Texans are easy to win over – just let us know that while you may not be from here, you got here as soon as you could.
Dallas made the CNN List of Hot Housing Markets this year with an impressive 2015 home sales forecast of +7%.
Dallas's economy remains strong during the Great Recession and continues to roll along in the recovery. This year Dallas is one of the busiest locations in the country for office, apartment and industrial development. The area is also highlighted by a very strong homebuilding market. North Texas is seeing its biggest real estate boom in almost 30 years!
Do you really need an agent to sell your house in today’s market? Here’s what Fannie Mae suggests to sellers on the Know Your Options section of their website:
“Select how you'll market and list the home (e.g., with a real estate agent or for sale by owner). There are pros and cons to each, but unless you are experienced at selling homes, it usually makes financial sense to get professional help—homes sold by agents typically sell at a higher price and spend less time on the market. An agent will also help you determine the best pricing for the house, they'll market the home, and they'll be your advocate throughout the process.”
If Fannie Mae says using an agent probably makes sense, perhaps you should interview an agent before putting your house up for sale. Full post here.
New builds are on the rise nationally....and are up big in North Texas.
As builders continue to have record new home starts this year, costs and build times continue to rise. Almost half of Texas construction companies are facing the challenges of losing their workers to other, higher-paying industries. The shortage of contractors is creating rising costs and longer build times. In Texas, over 90 percent of construction firms reported that they faced challenges in finding workers and 48 percent reported that lost workers to other industries. Rising demand for oilfield workers has been a major culprit of luring away construction employees over the past few years. Read the full article here...
The newest report shows that existing home sales are at their highest level for 2014! Check out the latest report from the National Association of Realtors.
Thank you to our clients, colleagues, & staff!
Christie Cannon & our Team was once again chosen by D Magazine for the Best Real Estate Agent list in 2014. Christie Cannon & Kevin Cannon were also chosen as a D Magazine Top Residential Real Estate Producers.
A special Congratulations to Sandy Stewart - Lead Buyers Agent for the Christie Cannon Team - who was again chosen for this prestigious award!
We owe a special "thank you" to the Real Estate Community for their recognition, our staff and agents, & most importantly, to our clients for their confidence & support.
Christie Cannon's D Magazine article can be viewed here at D Magazine.
Not Likely Yet..........
I am often asked about the foreclosure market here in North Texas. A great tool in understanding how much change we have seen over the last 18-months in regards to foreclosures is CoreLogic's National Foreclosure Report. According to CoreLogic's May report, foreclosures are on 31 months of consecutive year-over-year decline. In simply terms, May 2014 represents a 37% decline compared to May 2013 - and 9.4% year-over-year decline. While it is true that TX is represented in the top 5 states of foreclosure volume in the last 12 months, we are also among the lowest by percentage of inventory. TX's foreclosure inventory represents .07% versus a national average of 1.7%.
Does this mean the "foreclosure" market is in permanent decline?.. I would be very hesitant to say such... many factors affect real estate, both in the short term & long term. And while in TX (a non-judicial foreclosure state) our inventory has moved quickly, there remains a "backlog" of inventory in many parts of the country. Likewise, in many areas, we can still see Mortgage Delinquency Rates (a "precursor" to foreclosures) remain higher than historical averages.
All that said, at least in the North TX market, a buyer offering that they "just want to look at foreclosures" may have (as we say in TX) some very slim pickins'.
- Christie Cannon
Displaying blog entries 11-20 of 21
