Tag Archives: First time home buyer

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?




Keith Klassen, Broker


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.


Keith Klassen – Real Estate Broker



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?


Keith Klassen – Real Estate Broker


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.


Keith Klassen – Real Estate Broker


Do Governmental Housing Programs Work?

This is in reference specifically to the programs as of late that have tried to keep people in their homes through loan modification. This is a question I and many others have been asking and trying to figure out for some time now.

While I attempt to be eternally optimistic, numbers usually don’t lie (if they are presented honestly – ha ha).  Seriously though, I am an avid reader of anything Mish writes and he nailed it on the head here –

Statistical Nonsense On “Help”

For the 40% that end up defaulting anyway, how much money, time and mental energy did they waste in these programs? Assuming the other 60% keep their houses I have to ask “Who was it that was really helped? The bank or the home owner?”

I suggest in most instances if anyone was “helped” it was the lender. It is no favor to make someone a debt slave forever in these programs. Finally, one must look at other costs.

For example, how many people stopped paying their mortgages just to get “help”? Also note that the sooner housing prices bottom, the better off everyone will be. These programs harm price disclosure, help to keep prices elevated, and thus curtail genuine demand.

From these perspectives, HAMP and the entire gamut of “help” programs has done anything but help. Speaking of government help programs, please consider the Mission Statement of Fannie Mae.

We are a shareholder-owned company with a public mission. We exist to expand affordable housing and bring global capital to local communities in order to serve the U.S. housing market.

A quick check now shows the link I had with that mission statement has been redirected to About Fannie Mae

The link now states “Fannie Mae is a government-sponsored enterprise (GSE) chartered by Congress with a mission to provide liquidity, stability and affordability to the U.S. housing and mortgage markets.”

Fannie Mae clearly failed its mission to provide stability and affordability to housing. The truth is no government program ever provides stability or affordability. HAMP won’t either, and the truth should be easy to see.

You can find the full article here


Keith Klassen – Real Estate Broker


Article – Why the Housing Slump Isn’t Getting Better

I hate to be the bearer of bad news, especially in the face of all those who want to stay positive.

The keys numbers that is not publicized or talked about much, according to this article, the growing number of home owners who are unable to afford their mortgage payment.  This is one thing that is not getting better, rather worse, which will obviously curtail any policy and recovery plan of action.

Check out the article here

or cut and paste –



Keith Klassen – Real Estate Broker


Dream House – My Bizarre Real Estate Dream Last Night

When I waited tables at a restaurant in college I use to have, what we called “wait-mares.”  These were stress induced dreams/nightmares usually involving being overwhelmed with too many customers all at once, or showing up to work without your uniform, etc.

Last night I had a crazy dream about me buying a home and facing similar situations as my clients.  I drove up to a gorgeous home to view, that I loved from the pictures and online information – my parents were with me (weird).  When we a got out of the car, another agent was there about to show the home to their client.  I did the courteous thing and said, “We’ll wait until you are done and give you some space.”  In the meantime we struck up a conversation with the owner and bonded over shared interests and our children.  In a genuine way, we won their favor, which may sway them if it came to choosing between offers (a good technique in a “normal” market when dealing directly with a seller.  People that like you, generally want to work with you).

We waited about a half an hour (kind of a long time) and the folks before us were not through viewing the property, so we decided to politely press forward and have a look around.  When we got to the kitchen, we noticed that the first shoppers were engaged with their agent in writing an offer, right there at the kitchen table – the nerve!  We kept our cool and calmly continued viewing the home.  Parts of the home were upgraded, while other things were stuck in a time period.  There were many things that I did not completely care for, but my dad kept pointing out the great things about the house (which he never does in real life), such as, “But Keith, these things you don’t like are all easy fixes – just cosmetic.”  Or, my dad added, “Those things that concern you are small in comparison to the great price!  And it even has view of the beach!”  (Even though it was in the center of an urban area [don’t you love how dreams can bend reality?!]  I guess this is my secret desire, to live on the beach while still being connected to the city?  Come to think of it, that would be pretty awesome!).  As we walked around the house, we noticed more home buyers filtering though the house, until almost every room had people in it, all discussing the offer they were going to make – oh the pressure!

[This was quite a vivid and emotional dream]

I felt so torn inside, not knowing if I should move forward, and if so, how much over asking price should I offer?  We bumped into the owner while easing our way back to the front door.  She said, “Don’t miss the flat screen TV we installed on the porch or the toaster!”  What!?!?  Yes, I saw the perfectly mounted TV, and to the left of it hung a chrome toaster suspended from an overhang.  (I have no idea how that would work, but it was freakin’ cool.  Mark my words, the new future trend in real estate…. suspended outdoor, chrome toasters).

There my dream ended…

What does this all mean?  Am I stressed out?  Am I just feeling my clients’ angst?  Is my father a picture of myself and the things I tell clients? (uh oh).  Should I move to the beach?

Any dream therapists out there want to analyze me?


Keith Klassen – Real Estate Broker


Home in Escrow – Oak Park Victorian!

I just got into contract with one of my clients on this property in Oak Park.  It’s a fantastic 1890’s Victorian.

We just did the home and pest inspection yesterday.  I love days like this when the nspections moves forward without any big surprises.  I say this because every home has issues, especially ones built-in the late 1800’s.

Can you believe this home, in a decent part of Oak Park, in reasonable condition, is selling for a little over $100,000?  The home inspector asked if it is on slab or has a crawl space… I said “neither.  It’s a walk space!”  This basement (well it’s above ground) has at least 9 foot high ceilings!  My first thought when I viewed the property was, finish this out and double your square footage!

I was shocked with how little dry rot there was, plus a new foundation (no bricks) and an almost-new roof!

Check out the pics.

Keith Klassen – Real Estate Broker


Great Remodeled Home for First Time Home Buyer in Sacramento CA

Welcome to 5761 Sampson Way.

This house has been renewed… all you will need to do is move in (and plant a garden in the humongous backyard).

This home has been painted inside and out.  There are new doors (including security doors), new trim, new carpet and tile flooring.  The kitchen and bathrooms have been renovated and upgraded.  Check out the granite-slab counter tops and recessed lighting.

Just to mention a few more of the many upgrades – New central heat and air units, new landscaping, and newly pour concrete driveway (these costs and really add up).

You get all this for under $100,000.  That’s only about $775.00 per month in housing payments, which is less than you’d pay to rent this house!  We have more for sale like this.


Keith Klassen – Real Estate Broker


New California Tax Incentives for First Time Home Buyers

I pondered in past posts, “What will happen to the market after the tax stimulus offering is over, come April 30, 2010?”  Well, it looks like we will not have to answer that question until the end of the year.  The news is buzzing with the almost-done bill that will be signed by Governor Schwarzenegger to give new home buyers up to $10,000, starting May 1, 2010.  For so many of my buyers this is fantastic news, since the old dead line loomed and rush to find a home was on.  Yesterday after telling one of my clients about this news, he asked, “So does this mean that I could potentially get $18K from the government?”  I quickly said, “Yeah right, I don’t think so [greedy man!]”  Well, I just read an article this morning stating that this may be true for some.  Those who are in contract on a home purchase by the end of April and then close after May 1, 2010 will most likely get both, since the $8K is federal money, while the $10K is California money.  The writer called it a potential “stampede.”  This is a great visual and probably a true forecast – first time home buyers are going to go nuts over this.  Who wouldn’t?!?!  I thought $8,000 was extremely generous!

While this is great news for buyers and Realtors alike, I keep wondering, where is our State and Nation going to get this money?  My wife just chimed in, “China!”

Thoughts and opinions?


Keith Klassen – Real Estate Broker