Area Real Estate News & Market Trends

You’ll find our blog to be a wealth of information, covering everything from local market statistics and home values to community happenings. That’s because we care about the community and want to help you find your place in it. Please reach out if you have any questions at all. We’d love to talk with you!

Sept. 14, 2020

How Does It Measure Up?

People are always looking for a "down and dirty" way to determine the value of a home and square footage seems to be one of the most common things used by people whether they are buyers, sellers or real estate agents.  While it seems straight forward, there are several variances that can lead to inaccurate determinations.

The market data approach to value uses similar properties in size, location, condition and amenities to compare with the subject to arrive at a price.  Differences in any of these things can affect the price per square foot.  Appraisers are trained and licensed to make these adjustments but the differences are not necessarily objective and that is where opinions start to influence the value.

Even if a person were to make accurate adjustments, they would be based on the assumption that the square footage of the comparable properties is correct.  That leads to the next area of concern: how was the subject property measured.

It is commonly accepted to the measure the outside of the dwelling on detached housing.  Is it customary in this area to include porches and patios under roof and if so, do they get full value or only partial value?  Is there any value given to the garage since it isn't living area?  What about other areas that do not have HVAC coverage?

Some areas don't give consideration to basement square footage at all.  Others might give some value if it is finished or has access directly to the outside like a walk-out basement.  Similarly, attic space could be finished and under HVAC but if the ceiling height is not standard for the home, it may not receive value.

The problems become exacerbated when different comparables are not treated consistently and yet the common denominator ends up being an average of the square foot price of each.   This is calculated by taking the sales price and dividing it by the number of square feet being quoted.

The source of the square footage should be listed to help determine the accuracy.  It could be what the builder said it was to the original purchaser.  If there is a set a plans available, that might seem credible but it is not uncommon for the builder to make changes while the home is being built which could increase or decrease the square footage.

Another source is the tax assessor.  In many cases, they don't actually measure the home but take the word of the builders or appraisers for it.  If permits were obtained to add on to the home since it was built, it should be reflected in the square footage.  However, sometimes permits are not secured properly.

After reading this, you may think that more doubts have been introduced than solutions and you are correct.  It takes diligence on the part of all parties to determine the correct amount.  The most highly trained person will be the appraiser and they should be measuring the home in its "as is" condition but understand that even a competent person can inadvertently make a mistake.

Sept. 8, 2020

It's Worth Digging a Little Deeper

 

There are hundreds of thousands of people who believe, for one reason or another, they cannot afford to buy a home currently.  Some people  may not for any number of reasons but it would be very surprising to know how many who can buy but have gotten some bad information along the way.  It's worth digging a little deeper to find out the facts.

John and Karen have been renting a home for the last five years at $2,000 a month.  During that time, the value of the home they were renting went up by $30,000 in value while the unpaid balance decreased by $18, 400.  Even though they were fortunate enough the rent remained constant over the five years, they missed out on close to $50,000 of equity that the owner realized instead of them.

Another thing to consider with today's low interest rates, it is quite common for a mortgage payment to be lower than a tenant is paying rent for a similar property.  So, in this example, John & Karen paid more to rent than a house payment would have been and missed out on the equity build-up that occurred due to appreciation and amortization.

The simple fact is when tenants like John and Karen pay their rent, the landlord is the beneficiary of the rent received as well as the equity earned.  Over time, the rent paid by John and Karen and other tenants will pay for the landlord's rental.  It a great concept and a good investment.

True, not everyone can afford a home.  A buyer needs money for a down payment and closing costs.   They also need to have income and good credit to qualify for the mortgage.  Some of these may seem insurmountable but instead of imagining that buying a home is not in the cards at the current time, talking to a real estate professional is a better route to take.

There are lots of low-down payment mortgages available including 100% financing for qualified veterans and USDA eligible buyers.  It is sometimes more difficult to find sellers willing to pay all or part of a buyers closing costs when inventory is low, but lenders do allow it.  It is a matter of finding the willing seller.

The source of the down payment could be a gift from a family member as long as there is no repayment expected.  It's amazing how many parents or grandparents might be willing to help a relative get into a home.  Funds for a down payment may be available as loans or withdrawals from qualified retirement programs like IRAs or 401k plans.  It's worth investigating based on what retirement programs you have.

Good credit is necessary to qualify for a loan but buyers should not assume that theirs is not adequate.  A trusted mortgage professional can assess a situation and may be able to suggest some things that will not only raise the score enough to be approved but possibly, even raise the score enough to qualify for a better interest rate.

There are a lot of misunderstandings about whether a person can or cannot qualify for a home at this time.  Instead of relying on second hand information or something that might be floating around on the Internet, spend some time with a real estate professional who can give you the facts, assess your situation and if necessary, point you in the right direction to get help from a trusted mortgage professional.  Call (707) 467-3693 to schedule an appointment where we'll help you dig deeper to determine whether you can buy a home now.

Download our Buyers Guide to give you more information.

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Aug. 26, 2020

Forbearance is Not Forgiveness

 

Forbearance is a temporary postponement of mortgage payments.  The lender can grant this option to a borrower instead of forcing the property into foreclosure.  The CARES Act provides protections for homeowners with mortgages that are federally or Government Sponsored Enterprise backed or funded such as FHA, VA, USDA, Fannie Mae and Freddie Mac.

A mortgage holder should contact the lender to explain the temporary difficulty they are having making payments and ask for relief under forbearance or other options.  Once the lender grants approval, it is important for the borrower to get the terms of the forbearance agreement in writing to be clear about when the payments will resume and how the missed payments will be recovered.

Generally speaking, homeowners in a forbearance plan will not incur late fees and it should not adversely affect their credit.  Unfortunately, borrowers must be vigilant to see that the lender is protecting them from delinquent credit marks according to their agreement.

Forbearance is easy to receive but not so easy to recover from.  Free credit reports can be obtained on a weekly basis until April 21, 2021 at www.AnnualCreditReport.com.  Reports are available from Experian, Equifax and TransUnion.  This will allow borrowers to monitor whether the lender has inadvertently reported items inaccurately.

Prior to the end of the forbearance period, borrowers should contact their loan servicer, the company that accepts their payments.  Review the terms of the forbearance plan and expectations for repayment.  Verify the unpaid balance and that there are not any payments marked as late or delinquent during the forbearance period.

One more item to discuss with the loan servicer is the payment of the property taxes and insurance.  Since multiple mortgage payments may have been missed and most payments include 1/12 of the annual amounts for these items, there may not be enough to pay for them when they become due.

Since it is estimated that there are over four million borrowers in forbearance currently, it may be difficult to talk to the servicer but starting the process early and being persistent will be helpful. 

At the end of forbearance, the borrower needs to resume regular payments and establish a plan with the lender to repay the missed payments.  The terms are negotiated between the borrower and the lender.

One way is through a loan modification which can restructure the loan.  In some cases, it would add the missed payments to the loan balance and recalculate the payments for the remainder of the term. 

A borrower could pay the forbearance money in cash but the practicality of that is not realistic.  If the person couldn't make the payments during forbearance, they probably don't have the liquidity to pay them afterward.  This option is entirely at the buyer's election.

Forbearance is a temporary way to postpone the mortgage payments with the understanding that you will be able to resume repaying the loan.  If the circumstances that caused the issue initially become permanent, then, other remedies must be considered.  If there is equity in the property, selling the home may be the way to materialize it for the homeowner.

Please contact us at (707) 467-3693 if you need to know what your home is worth and how long it would take to sell it.  We're happy to provide this information as a service without obligation so you can be aware of your options.

July 31, 2017

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Posted in Market Updates