Tag Archives: Adventures in Real Estate

Appraisal Challenges and a Rebuttal with the VA

brick front doorThere is a lot of nervousness these days getting past the appraisal contingency, which is one of several things that a real estate contract usually hinges on when a purchaser requires a loan.  The contracts typically most susceptible are those from FHA and VA buyers, as these buyers many times can, and do offer more than the listing price, and the appraiser tends to scrutinize the property much more.  These loans require the least amount of down payment, with the VA requiring zero down.  A higher priced offer, over the list price, excites a seller as they see dollar signs, while a savvy agent knows that it must first get through the appraisal hurdle, or else the deal falls apart, or the seller has to lower the purchase price to the appraised value.   Many times an agent will meet the appraiser at the property in an attempt to educate, enlighten,  or justify the contract price using comparative listings and sold properties, as well as showing and detailing improvements, etc.  Some times this is helpful when done with tact, while other times it just annoys and ticks the appraiser off.  I typically just want to make sure that the appraiser is local and familiar with the area.  Homes that border neighborhoods and dividing lines can be tricky if the appraiser  is unaware of these boundaries, which a map does not show.

I am currently listing a home and in contract with a VA purchaser.  I felt that we priced the home fairly, in the sweet spot of the market.  We ended up getting two offers within a few weeks and settled in on one that was about $3000 under asking price.  All the inspections went well with no issues.  The appraiser called to let me know that the value would be coming in below the contract price, but wanted to give me an opportunity (known as “The Tide Water Process” only for VA loans) to submit my own findings and comparative sales.  I thought this was courteous, however, in our conversation he made it clear that he takes his job very seriously, and that he’s hardly ever wrong.  I interpreted that as, “go ahead and knock yourself out, but I’m not changing the value.”  I proceeded to send him the comps and a write-up as to the value of the home, including upgrades and details he may have missed.  Also I asked the question, “What other house can the buyer purchase in this area for the same price that is similar, where they can keep their kids in the same school” (which I knew was one of the buyer’s objectives).

End result:  The appraisal came in at the list price, $3000 over the contract price.  Go figure.  Seller is getting his money’s worth by hiring me.

Lesson learned:  Never give up.  Decent writing can go a long way.

Anyone else have experiences, good or bad with appraisers and appraisals?

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Keith Klassen, Broker

916.669.9030

Moisture in Windows – Real Estate Sacramento

I have viewed and sold so many homes with dual pane windows that have failed.  The clear, or should I say unclear, indication is fogged up glass.  When you try to clean them, you quickly realize that there is moisture trapped in between the two panes, hence the window has failed.  Most inspectors will tell you that this does not diminish the effectiveness of the window, rather it just looks ugly.  And typically the remedy is replacing the glass or the window, which can be costly.

I ran across an article/ad regarding a newer technology, whereby they can de-moisturize and repair the window by just drilling to small holes in the corners.  Sound great if it actually is legitimate.

Has anyone out there utilized this technology?  And more importantly, does it work?  If so, this would be a great innovation to all those failed windows out there.

Enjoy,

Keith Klassen – Real Estate Broker

916.669.9030

KeithAKlassen@gmail.com

Appraiser Kills Another Deal

[in a very sarcastic tone of voice]

I love spending uncountable hours searching the internet, showing many properties, counseling the buyer, writing a contract (with many revisions), coordinating with the lender/loan officer, scheduling and attending multiple inspections, re-showing the property, counseling the client, meeting for lunch and coffee multiple time to sign disclosures and paperwork, running numbers, Negotiating repairs, etc., etc., etc., …. ONLY TO BE KILLED BY AN APPRAISAL THAT COMES IN $16,000 UNDER THE CONTRACT PRICE.  This killed the deal for both the seller and buyer.  It is not a flip, short sale, or bank owned.  Don’t get me wrong, I love my job and I excel in these situations, but this is ridiculous!

[in a serious tone of voice]

Here are some of the wonderful aspect of the property…

New paint (inside and out); Newer roof; New electrical and plumbing; Renovated kitchen and bathroom; Newer central heat and air; Double size lot; Historic built-in china cabinet; New front door; Several new windows; Section 1 and 2 of pest report to be cleared, and more!

Yes, this property happens to be in Oak Park, Sacramento, but most all knowledgeable appraisers and agents know that Oak Park is “street by street.”  I personally know several of the residents on this street.  Comparing this home to homes a mile away does not do the home justice.

I am coming to believe that this area is being redlined.

Again, my question stands:  When will the market drive the market oppose to appraiser and bank practices?

Enjoy,

Keith Klassen – Real Estate Broker

916.669.9030

Is Green Really Worth the Green?

I caught a news piece this morning while at the gym.  The title was something like the one above.  The segment dealt with the question, Do energy efficient upgrades in a home make a difference in the sale price? Even with long-term energy savings, the short and resounding answer was, “NO.”  While it makes all the difference for the environment, the sale prices do not reflect the upgrades, whether it be solar, added insulation, dual flush toilets, Energy Star appliances, etc.  The target then got pinned on appraisers.  They bluntly said that it was the appraisers fault… [paraphrased] The appraisers are behind the curve on this one.  It’s the appraisers that have not gotten up to speed and are not giving correct value to these items.  When an appraiser sees a furnace, whether it’s energy efficient or not, they just see a furnace…”

Now I have friends that are appraisers that will read this and have an acid reflex response (a little sour taste in their mouth).  And I know theses appraisers do know the difference and can spot energy efficient systems.

I would love a response/rebuttal from the appraisal world.  Sound off.

And don’t kill/hate the messenger – I’m just reiterating what I saw on the news this morning.

Enjoy,

Keith Klassen – Real Estate Broker

916.669.9030

The Things We See When Viewing Property

I know you were hoping for a risqué story… or the one were the daughter called the police on me for “breaking in” and “accosting her” as the mother said… nope just a cool indoor sauna.  I walked into one of the space rooms of this blue-collar home and “Whoa, didn’t expect to find this…

Enjoy,

Keith Klassen – Real Estate Broker

916.669.9030