Tag Archives: advice

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

Sacramento Housing Inventory (Spring/Summer 2013) – Like Trying to Find a Needle in a Haystack

However cliché this title sounds, buyers and some realtors alike are completely discouraged by the lack of homes to choomonoploy housesse from.  I just read the statistic that the median days on the market for a home in April 2013 was 12 days.  In addition,  the inventory has shrunk a bit further since then.  Buyers use to say or think, “If I don’t get this particular property, I will just wait for the next one.”  Now they are saying, “The next one might cost more than we want to pay (or can afford), or we may have to wait 4 months to find it!”

Some home buyers have told me that they are just going to wait until the next dip in the market.  This could be extremely wise, or they could be waiting a while?  Time will tell.  Ultimately, like my dad use to say, “You’ve just got to get on the merry-go-round, or stand on the sidelines and wait.”

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

Housing Tax Credits

Quick run down…

The Federal Government is offering and has extended an $8000 tax credit through the end of this month.  Home buyers need to be in contract on a home by April 30, 2010 and close escrow by June 30, 2010.

Many of my clients have asked how they get the credit once they close.  Go to this website, which will answer most all of your questions – http://www.federalhousingtaxcredit.com/home.html

OR

just click here

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California Housing Tax Credit

Up to (key phrase) $10,000 tax credit from the State of California for first-time home buyers, who purchase a home after May 1, 2010.  A few qualifications:

– The money is credited over 3 years ($3,333/year) for taxable income.

– The money ($100M) will run out.  While the programs runs through the end of December 2010, some are predicting toward mid-August it will be gone!

Here is site to visit for questions and how to claim this incentive – Ftb.ca.gov

Enjoy,

Keith Klassen – Real Estate Broker

916.669.9030

Property Management Market in Sacramento CA

Just like home values, market rents, in Sacramento CA, vary depending on the location, size, and quality (amenities) of the property.  Currently, the inventory (supply) is up, there for prospective tenants have much to choose from, driving the rents down.  Tenants can now be picky, as they hold most of the “cards.”  There are a few areas that stay strong – East Sacramento and Midtown (as well as Curtis and Land Park when people can afford it) always have high demands to live there.

I have an owner client that was previously renting a 2 bedroom home for $1250.  We’ve lowered the price to $1050 and are still not get very many showings.  The people how do look, say, “Yeah, I have 4 more to look at and I’m in no hurry.”  After showing the property yesterday, the couple said, “We love it and think it’s adorable, but we have one little questions…  We cannot live without a dishwasher and noticed that this home does not have one.  Would you be willing to install one?”

I found the owner to be very amicable to the idea and said, “If it will get them in, I will do it!”  Kind of like, he just threw up his hands and said, “I’m tired of this game, let’s get it over with.” So I called the potential tenant back with the good news, ready to schedule an application date, etc., and they said, “Well, we have a few more we want to look at before we make a decision… but we do want to decide soon… we’ll let you know.”  I guess we came off too desperate?!?!  Par for the course.  It’s a brutal time to be getting top dollar on a rental here in Sacramento.

What has been your experience?

Enjoy,

Keith Klassen – Real Estate Broker

916.669.9030

Philosophy Meets Real Estate in Sacramento CA and Beyond

While this post has everything to do with, and is focused on the details of the real estate market, the economy, investing, buying and selling property, my little neighborhood in Curtis Park, Sacramento, sometimes I can get a little philosophical.  What is the meaning of life?  What is the purpose of my life?  How do the situations and the context which I find myself shape life?  Are there forces at work bigger than the indexes?  Is this depressed economy doing something in our culture and country that may actually be positive?

I mused the other day over the thought that storms and hard times in my life have been the things that has been pivotal or a “rescue” of sorts for my life.  Let me give you an example.

When I hit the ripe age of 31, I started having chronic back pain.  This was the same time as we had our first child.  I have painful memories of not being able to carry my newborn son very far in the Baby Bjorn (front carrier), due to back pain.  My wife just thought I was trying to get out of carrying the baby 🙂  I tried a lot of quick fixes like a hot pad, muscle relaxing creams, simple stretching, and more.  I continued to not be very active and I lost sleep due to the discomfort.  As a result, I made a determination that I had to seek physical therapy and strengthen my core muscles, or I may go through the rest of my life with a dull, (kind of) bearable back pain.  I could not deal with the idea that I would not be able to carry, let alone wrestle with my sons as they got older.  As a result, I buckled down, swallowed my pride and got help.  I now stretch daily, am aware of my posture, wear orthotics, work out 4-5 days a week (focusing on core muscles) and am in the best shape of my life.  Oh yeah, there are nightly wrestling matches with my boys, now 4 and 6 years old.  I can sleep soundly and walk/run long distances without pain.  This pain-in-the-back changed my life for the better.

Whether it be a health situation, a tragedy of some sort, or a financial crisis, the “storms” in life will reveal in us who we really are and what lies at the core of our being.  I wonder, is this housing storm revealing what our nation is really about?  While it’s tragic for many (including myself), is there something underneath it all that is good?  Is there a corrective measure that we need as a country that will be of great benefit in the long-run?

I read an article lately about “The return to frugality” – how saving money is back in vogue.  Trends show that people are staying home and finding inexpensive ways to be entertained.  Maybe couples are conversing more and experiencing greater intimacy?  Maybe families are doing things like going on bike rides together, or spending a day at the park with a picnic lunch?  Maybe people are reading more?  Maybe consumption is down (I know that is not helping our economy in the traditional ways)?  Maybe people are shopping more locally?  Maybe people are saving resources by not driving as much, or using as much power?  I’ve heard that micro farming is becoming a big thing for some families, or at least there is rise in growing your own produce.  Maybe neighbors are talking more and sharing ideas and bonding over a shared plight?   Maybe people are looking after their physical health more?  I notice the gym is packed on Fridays with “furlough Fridays” in effect for state workers,.

I got to thinking a little deeper…. Usually I try to escape storms and run away from them – this is the rational thing to do, right?  However, if I am constantly trying to escape the thing that could radically change my life for the better, maybe I should attempt to look at storms a bit differently?  Do I just continue to put “Icy Hot” on my dull back  pain, or am I going to embrace the trauma and enter into a larger, positive, more life-impacting shift?

Your deep thoughts?

Enjoy,

Keith Klassen – Real Estate Broker

916.669.9030

Retro Homes in Sacramento CA

It always amazes me to walk into a home that is like a time capsul.  Nothing has been change and everything is in pristine condition.

When did these go out of style?  I’ve never seen a manual ice crusher before.

Have we hit bottom in the Sacramento CA housing Market?

This is a question I get asked frequently and one that I hear attempting to be answered.  “Have we hit the bottom of the housing market?  At times I have fallen prey to the common thinking that says, “How much worse can it get?  The market has dropped ____%, how much more can it go down?”  Then the conclusion… “We must be at the bottom.”  Anyone with their head in the game has thought/asked this.

However, after just doing a little research you will find that there are key economic forces in play that have to change (unemployment for one) before “the bottom” is reached AND our economy comes out of the recession in which we find ourselves.  Forecasters have been calling the bottom for the last 2 years or longer.  So have we hit bottom yet?

For an excellent read on some of these economic factors, check out this article, The Orwellian Recovery.  The author succinctly states,  “I don’t see how housing prices can recover at the same time inventories, mortgage rates, and unemployment rise.”

A colleague an I were discussing this topic over coffee today… what’s going to happen when the government backs off the stimulus and interest rates rise?

It’s a complicated and highly opinionated topic, what are your thoughts?

Enjoy,

Keith Klassen – Real Estate Broker

916.669.9030

Real Estate Therapy in Sacramento, CA

Lately I’ve had the privilege of gaining several buyer referrals, where the previous real estate agent, for a variety of reasons, was not able or capable of getting the job done.  One agent was in the business part-time and did not have the availability to do the follow through.  Another situation, the agent said to the buyers, “You are too picky… you need to expand your search and buyer something [now].”  I’ve retold that story many times… how crazy is that?!  I mean, there are thoughts that might go through my head about certain buyer characteristics (especially if I’m hungry, tired, or unbalanced)… but let’s just say, FILTER!  Let me say it again, FILTER!  If I said everything I was thinking, I might get beat up (and that’s just my wife – ha ha ha).  Back to the subject… My point… plain and simple I’ve had the good fortune of capitalizing on other agent’s inability to do their job (well).  One frustrated client said, “Our agent wouldn’t return our calls!”  Most recently, I received a referral on a client whose previous agent decided that they could not make a living in real estate any more (this is pretty common these days).

While this phenomenon has been good for my business and is a nice pat on the back, as I imagine the ones referring these clients say, “Call Keith, he’s the most solid (best, most professional, gets-the-job-done, intelligent, savvy…) Realtor I know!”  Okay, emphasis on I imagine.  Bottom line, I call people back, am full-time, and don’t say (aloud) everything that passes through my head.  It’s been good to get these referral, however, I find myself having mini-counseling sessions to give these beat-up buyers real estate therapy.  These are wonderful people now on edge due to their past agents.  For the one client, she kept asking me during the showing process, “Do you think I’m too picky?”  My response, “Why yes I do, let’s stop right now, I can’t take it any longer!”  Of course not!  And I wasn’t even thinking that 🙂  Here’s the genuine and right response, “You should be picky.  You are making one of the biggest investments of your life.  My role is to assist and help you find your ideal home that fits your buying criteria.”  Agents, takes notes – this is real estate 101 / Socialization 201.

You will be helping yourselves as well as your clients when you help them focus their search.  If they don’t want a swimming pool… don’t show them homes with swimming pools.  If the client can only afford a $250,000 home, then don’t show them homes that are listed at $300,000.  If they are using a down-payment assistance program that requires that they buy an REO (bank owned property)… yep, you got it, only show them bank owned properties.  I know, not rocket science, however, it requires that the agent listens, and asks questions, and takes notes, and is actually engaged.  The other day I met a clients for the first time that was frustrated and burnt out on her last agent.  I found out through listening to her story that they’ve looked at 40-50 homes over the last 5-6 months.  Naturally I asked, “What were some of the things about those homes that did not work for you?”  She replied, “Well, most needed too much work, and I don’t have a lot of money to do a lot of work.  Many had swimming pools, and I definitely do not want a pool.  Others backed up to a busy street, and I don’t like the noise.”  She went on.  I took notes.  Wen she was done I ask more questions and learned that she also was allergic to cats, loved gardening, and has a niece that would be living with her.  I asked specific questions like, “What do you mean by ‘a lot of work’?” And, “How much money could you spend on fix up costs.”  And, “what is your favorite thing about this house?” And, “Does your niece need to be in walking distance of the school?”  And, “What matters most in buying a home on the list we’ve created?”  Again, this is not new or an unusual tool in the agent’s belt, but I am surprised how little it is used.

I’ve found it a refreshing experience to have these real estate therapy sessions. The client finds relief from frustration.  They feel cared for and in good hands.  They get motivated and excited to find that home, as they now know we are not going to just look at anything that pops up.  The homes we look at will all be potential purchases.

My therapy sessions are free.

What are some experiences you’ve had as an agent or a buyer? I’d love to hear your story.

Keith Klassen – Real Estate Broker

916.669.9030