St. Louis Real Estate - Mortgage News - Declining Market 2

Filed under: Appraisal News, For Buyers, Mortgage News

Declining Markets Part 2 by Chris Scheer, Branch Manager, Cornerstone Mortgage, O’Fallon, MO

So what defines a “Declining Market?”  Some investors have taken their large paintbrush out and if an area; county, city or zip code has seen their average sales price drop in the last quarter; they are calling it a “Declining Market.”  Others have chosen a smaller brush and have stretched the time out by reviewing the last six months.  Then the rest of the investors have left the defining to the appraisers, which is whose shoulders it should fall on.  They are the ones whose job is to provide support that the investor is making the right decision to purchase a loan on a certain piece of property.

So when I checked with a few appraisers to learn their definition of “Declining Market” I was not surprised to find that each appraiser had their own definition of “Declining Market.”  The thing to remember about appraisers is that what they do is not a science; it is more of an art.  So again we use the paintbrush analogy and there are some appraisers that are running scared and using their large paintbrush and putting the term “Declining Market” in all of their appraisals.  Others are taking the time to do a statistical review of the cost of the homes in the various areas and are applying the term when there is a continued decrease of value that exceeds 5% over three six month periods and then there are others who are only applying the term if the valuations have changed by greater than 10%.

In addition, most investors are only concerned with reducing the loan to value on Conventional loans.  On FHA and VA loans, the appraiser has factored the market into the value and it does not have an impact on the amount the borrower can borrow.

For questions or comments on this, please contact Chris Scheer at chrisscheer@stlouisrealestatevoice.com

Tags: St.+Louis+Real+Estate, Mortgage+News, Appraisal, Home+Buyers, Declining+Market

Posted by doug   |   Read More   |   4 Comments »   |   05.13.2008

St. Louis Real Estate - This is one Oops you can’t make!

Filed under: Appraisal News, For Sellers, Real Estate News

When you’re selling St. Louis Real Estate, what’s the biggest mistake you can make? It’s the price! Today, more than ever, getting it right from the beginning is the key to getting it done. Here’s a summary from our newest contributer Jim Croak, an appraiser with A&C Appraisal.

Request several CMA’s from qualified Realtors. If the data is very close, you’re finished with the pricing scenario. If not, you should call in an appraiser for a “unbiased” opinion. They will typically come at the problem from three different approaches, sales comparison, income approach and the cost approach. After an inspection, a market analysis and a review of the three approaches to value, a final value conclusion is reached.

Next you should review the local market. The St Louis Real Estate Voice weekly market analysis is a great place to start. In your price range, how many homes are you competing against (Active Listings)? What is the Days on Market (DOM) in your price range? What is the ratio of listing price to selling price for your price range? Finally, what’s your time line for “getting it done”?

With an independent appraisal in hand you have a great negotiating tool. It’s an independent opinion of value. A bonus is achieved when you use a seasoned appraiser, one that is approved by a broad range of area lenders. What’s the bonus? Your buyer may be able to use this appraisal with their lender, saving them some money. What’s the bonus for you? You get to sell your home, sometimes it’s the little things that make the difference.

Jim can be reached at jimcroak@stlouisrealestatevoice.com

Posted by doug   |   Read More   |   Your Comments Are Welcome!   |   08.14.2007

I want to sell my home! What’s it worth?

Filed under: Appraisal News, For Sellers, Real Estate News

Determining the value of St. Louis Real Estate isn’t rocket science!

Unless of course you take the simplistic method and place your faith in a “web site mash up” that tries to do it from outer space!

In which case, you’ll probably wind up in the “expired listing” column, unhappy with your outcome, unable to move forward, and peaved at everyone but yourself.

If you don’t trust a professional realtor, that has access to neighborhood data via the MLS, to do an acceptable CMA for free, then pay for a professional appraisal. Find an appraiser that does appraisals for “mortgage lenders”. Why, because mortgage lenders won’t be making loans for over valued property, especially in todays environment.

Here is a first hand sad story about SillyO, a web mash up and a real unhappy seller. My comp’s said the property was 650,000 low end and maybe 700,000 plus in a good market with the house spiffed up. . .not upgraded. . .just top showing condition. . .even recommended a “staging company”. SillyO shot a 850,000 to 900,000 figure from outer space, and the seller wouldn’t relent. Seller wouldn’t do any spiffing either. Do I need to go on. Still on the market, 270 days later, still priced at 750,000, and could count the showings on one hand. In the meantime, ignore the buyer feedback, don’t get an appraisal and “keep on keeping on”.

But this isn’t a story about an unhappy seller, it’s really a story about “web mash ups” and the disservice that they provide to the already screwed up real estate market. I comped the home on all of the “mash ups” tonight and guess what. . .low value 900,000, high value 1,200,000.

Guess my seller should call on one of the “mash ups” and see if they’ll buy it.

Posted by doug   |   Read More   |   Your Comments Are Welcome!   |   05.21.2007