Appraisers Under Fire?

During the boom years, appraisers were questioned on presenting appraisals that were multiple percentage points higher between similar houses closing within a month's times of each other. Now the tables have turned and the appraisers are being questioned on the de-valuing of houses when they are appraised and under contract. So the house is listed and often as a short sale. A buyer has presented their best offer, the funding lender orders an appraisal and it comes back lower than the offered price. Well now the listing agent must go back to the seller's lenders and ask for further reduction in payoff.

Why is this happening? Well it is the new guidelines the appraisers are having to work under. First, loan officers, mortgage brokers and real estate agents cannot have any role in selecting appraisers. So the lenders are outsourcing the selection process to AMC's or Appraisal Management Companies. These management companies take a hefty fee of nearly half of the appraisers fee for giving them the assignment. Instead of the appraiser working in a specific area of familiarity, they are being asked to work anywhere and everywhere requiring them to travel great distances for an appraisal on a property they are not familiar with. Now when doing an appraisal you make adjustments to the comparable properties. So that requires a little research to figure what the adjustment for an extra garage bay or an extra bedroom or larger lot size should be compared to other properties. So the appraiser has more homework to do for half the pay.

Other considerations or adjustments appraisers need to account for (in my opinion) is properties that are sold as foreclosures versus short sales versus normal transactions. A foreclosed property usually has limited disclosures, no SPDS report, no CLUE report, shortened inspection period (some lenders even requiring the inspection to be done BEFORE presenting the offer). So naturally that would lead someone to present an offer at a discount because they are limited in the knowledge of a property. Whereas in a short sale or normal transaction, you will receive a Seller Property Disclosure Statement, you will receive a Comprehensive Loss Underwriting Exchange report so the buyer knows the claims history on the property and if there are any problems the owner knows about. Also a foreclosed or lender owned property will result in a daily per diem charge if the property does not close in time. A short sale or normal transaction the close of escrow date can usually be extended with no harm to either side.

How about financing, does a cash purchase have as high of closing costs as an FHA loan? No it does not, and therefore in a cash transaction shouldn't there be an adjustment on the price as to what someone would have paid if it were financed? Well just some food for thought.

If you are interested in buying or selling your house in Gilbert, Phoenix, Scottsdale, Mesa or another city or town in Maricopa or Pinal counties, contact Marie Zubkoff at 480.233.7051 or Andrew Walsh 602.527.2639 with US Preferred Realty.Visit us at http://YourGilbertHome.com Thank you!

Count down to Tax Credit Elimination

ALL FIRST TIME HOMEBUYERS MUST CLOSE BY MIDNIGHT NOVEMBER 30, 2009.

Well, that is if you qualify for, and want to take advantage of.... the $8,000 tax credit for purchasing a home. In past posts we went over some of the qualifications for the tax credit such as:

1) You cannot have owned a home in the past three years.
2) Income requirements cannot exceed $75,000 if single and $150,000 for married.
3) The credit is worth 10% of the purchase price of the home up to a maximum credit of $8,000.

Now, what does the December 1, 2009 due date mean? Well it means that your home must CLOSE on or before midnight of November 30, 2009. OR YOU LOSE THE CREDIT.... Make sure if you are presenting offers that you allow a few days to a week for minor delays... Do not risk $8,000! Because you cannot get an extension unless Uncle Sam gives it to everyone.

Exactly how much time does that leave you if you have not even started to find a home? Well let's work backwards. Say to be safe you allow the closing two Fridays before the deadline. That makes it November 20th. Now once the property is found you need an average of 45 days to close. So let's figure the under contract date to be October 6. So if your home is to be under contract by October 6, that allows about seven weeks from today to find your home. Certainly plenty of time for you to find an agent, obtain financing from a qualified lender, and start looking. But, you do not have time to sit on the fence to determine whether or not you want to continue renting for another couple months before looking while you wait to see what the market does.

So, it's time to contact that qualified agent. Marie Zubkoff at 480.233.7051 or Andrew Walsh 602.527.2639 with US Preferred Realty. Visit us at http://YourGilbertHome.com Thank you!

Investors Listing & Buying Short Sales?

Have you been contacted by an investor that wants to list and buy your short sale? Here are five tips to think about and questions to ask before listing with them. We will cover more on another day.

1). Are they requiring the use of their preferred listing agent or REALTOR? If so who is that listing agent representing. Who is going over the listing agreement with you? Is it the investor who is buying the property or the listing agent who is supposed to represent you?

2). Make sure you receive and fully understand the agency disclosure and election. NO real esate transaction should ever take place without a buyer AND seller acknowledging both sides by signing this!

3). What are the current market comparables to your home? Ask for this and review them. Make sure the homes accurately represent yours.

4). Short sale addendum, make sure there is a short sale addendum included and you thoroughly read and understand it.

5). Look for, Read and Understand the opt out clause. Generally as a seller if you accept a buyer's offer, you must sell your home to them. In the presence of a short sale though, the sale is contingent upon the lender's or "third parties" approval (if a short sale addendum is included).

A bonus tip when you are working with investors, is to make sure all of the forms are drafted from boiler plate Arizona Association of REALTORS forms. These forms are created in the interest of the general public. Please please please if you do not understand any of the forms, consult an attorney to help explain them to you.

If you are approached by an investor looking to purchase your home, please also interview other agents whose primary focus is to sell your home rather than buy it to make a profit. A traditional REALTOR has the same goal as you which is to sell the home. Not to buy it in hopes to make a big profit.

Contact Marie Zubkoff at 480.233.7051 or Andrew Walsh at 602.527.2639 with US Preferred Realty to discuss your Arizona Real Estate needs. If you are a buyer or seller, we can help. visit us at http://YourGilbertHome.com Thank you!

New TILA Disclosure requirements. Who is TILA?

TILA is the Truth In Lending Act also known as Regulation Z. A new requirement added for Arizona as well as the rest of the nation for lenders to provide another disclosure. The new requirements apply to all mortgages including primary and secondary homes. Investor loans are exempt.

Lenders must give good faith estimates of mortgage loan costs within 3 business days after the consumer applies for a loan (early disclosure). The lender may not collect any fees before the disclosure is provided except for a credit report fee.

THE CLOSING MAY NOT TAKE PLACE UNTIL THE EXPIRATION OF A 7 DAY WAITING PERIOD AFTER THE CONSUMER RECEIVES THE EARLY DISCLOSURE!

Under strict circumstances this period may be waived by the consumer. It may NOT be a standard of practice for the lender to ask the consumer to waive this waiting period.

If the APR changes by more than 0.125 percent the lender must provide a corrected disclosure and wait an additional 3 BUSINESS days before closing the loan. The APR includes the interest rate and other costs related to the settlement of the loan.

Please contact Andrew or Marie for a lender referral if you are looking to purchase or refinance your home in Arizona! The source of this information is the arizona association of REALTORS.

The Dangerous SB-1271 for Arizona

What are some of the elements of bill SB-1271 that make it dangerous for the Arizona real estate market? Well let's take a look at some them pointed out in the letter the AAR CEO Tom Farley wrote to Governor Jan Brewer: Second/Vacation homes, rental property, and family-owned property may lose their anti-deficiency protection if the trustor did not utilize or occupy the property for six consecutive months. The loss of this protection could lead to deficiency judgments being placed on or against personal, real and perishable property. Bear in mind, deficiency judgments CAN result in the garnishmet of wages! Bankruptcy filings may increase because of this which will likely cause additional creditors to be harmed.

Another well thought out point Tom Farley addresses is that this amended statute is retroactive. So that it is not forward looking. The terms are not changed for loans that are originated after a future date, they retroactively affect all loans that have already been created. Also, lenders that receive TARP funds are also authorized to seek deficiency judgements against property owners after foreclosure. So a lender can foreclose... get a deficiency judgment... AND receive TARP funds? And all of this in one of the fastest states to file and foreclose on a home. Tom Farley is correct when he says "There are many reasons, .....to be profoundly concerned about the consequences of this bill".

SB-1271 Anti-Deficiency Statute

The anti-deficiency bill SB-1271 that passed Arizona legislation is receiving some heat. The original intention was to prevent investors in Arizona from foreclosing and short selling homes and sticking the local Arizona lenders with out any method of recovering the funds and thus making those banks go belly up. The major change was the requirement that the borrower had lived in the property for six consecutive months. Stick with us as we cover this topic over the next couple days.