Thursday, June 27, 2013

Portland real estate appraisal; a brief primer

In the "go go" years, lenders had staff, or preferred appraisers who worked with the lender in establishing the value of a home.  In a good way, a lender could clue an appraiser in on specific information about a property.  In a bad way, a lender could put pressure on an appraiser to find a certain value or overlook shortcomings in the interest of future work for the appraiser from that lender.  And of course, some lenders were so anxious to make a loan, they did a "desk" appraisal, looking at statistics on a property and the neighborhood, without a property visit.  Think that system might have been abused a bit?

 Monday morning quarterbacking of the housing crisis led to an overhaul of that structure such that appraisers are now affiliated with appraisal management companies, and lenders order appraisals though those companies, with no direct link to specific appraisers.  Oh yay, another layer of middle men!  This restructuring did lead to some good separation between lender and appraiser, but it also lead to a not so good disconnect between appraisers and the areas and properties they appraise.  A lender who often works in the inner city could order an appraisal that ends up being done by an appraiser experience with in new construction subdivisions.  ack.

This history informs what we are seeing today.  Take the potential misinformation, combine it with a quickly appreciating market, where the basis of an appraisal comes from closed sale in the past.  Then, on occasion, add in an appraiser's bias about a certain area, or in one case I had, an appraiser who fancied himself a bit of an economist and was including his opinions about the regional economy when establishing a value for a property. Then, allow for good old human error here and there.

Appraisers have certain rules and regulations they work by in establishing value.  This is a good thing.  But those rules often don't quite match with how a certain marketplace establishes value. It is this disconnect that can also lead to low or "off" appraisals.  It is VERY hard for an appraiser to give much value to below grade square footage, no matter how well done it is and how much the buyer and seller like it.  That hip lofty area that serves as a great office probably doesn't count as a "room".  And the urban location, close to everything, may get a deduction based on a busy street or inconsistent uses (residential, industrial, commercial).  In addition, low housing inventory has buyers bidding up many properties well over their list, and probably over possible appraisal prices.

Don't despair.  As  real estate agents, if a low appraisal comes in, it is our job to take a good hard look at it.  We especially look for any actual errors, especially in square footage calculation.  We also look at the comparable properties used by the appraiser, and try to provide more accurate "comps".  It is possible to have an appraisal reviewed; though usually only in the case of actual errors or blatantly poor comparable properties.  We also help to avoid low appraisals in the first place.  We can provide an appraiser comps we think might be helpful.  We can also provide a list of improvements made to the property, especially those that might not be obvious.   Many appraisers will let us know if they are having trouble finding the value, a hint to provide comps.  And lastly, good old courtesy and respect can go long way toward a decent appraisal process.

Worried about how your place might appraise?  Give me a call and I'd be glad to look at some comps for you.  Contemplating home improvements?  I'd be glad to counsel you with regard to cost vs. value in our market.

Monday, June 24, 2013

Politics of carpooling and other joint ventures

For Emma's elementary and middle school years, we shunned carpools for a variety of reasons; we lived reasonably close to school, I have a flexible schedule and I wasn't about to let someone else make my kid late to school. To our credit, both Emma's and mine, she was NEVER tardy in her nine years at Winterhaven. 

Enter club volleyball with two practices a week across town and tournaments sprinkled across northwestern Oregon.  All of a sudden, a carpool looks pretty darn good.  We're lucky to have a total of four families commuting from our neck of the woods to these events; all reasonable, responsible and on time. 

With four families, we each drive one leg per week; to or from.  And we volunteer for tournament days; especially that early leg to get the girls wherever by 7:30am;  Hillsboro, Salem, McMinnville etc.  All of us have varying pressures on scheduling and varying preferences on which leg to drive when.

 My general approach is to lead the scheduling charge, volunteer early for the shifts I want, and do slightly more than my share.  This gets me the schedule I can do, and with "one up", leaving me comfortable asking someone else to bring my kid home when I can't.  The thin veil of appearing to be helpful when I'm really securing my preference.

This same can apply to many joint ventures, including potlucks, right?   Pipe up early that you'll bring your preferred dish; your are an early bird and helpful  Never mind that you just secured the dish you wanted, preempting other folks.

 And that person who looks like a slacker by volunteering late and "batting clean up" ?  He or she may well be the most selfless person in the group; driving shifts no one else wants, bringing that dish to the potluck that is really needed, but a hassle, and all with a smile.

Who are you?  I seem to be oddly, selfishly controlling, while thinking I'm helpful and eager.  hmm.

Sunday, June 16, 2013

Holy Cow! No wonder we're so busy.

Anecdotally, the market has been feeling crazy busy these days.  There are lots of cash buyers in the market, which makes for fast and somewhat loose players.  Rapidly rising prices make cash king, as worries of low appraisals are off the table.  Waived, or minimized inspections are also on the rise.  Buyers, please don't take on a potentially leaking oil tank.  Most any other conditions can be reasonably estimated, but an untested tank could get you your very own superfund site.

So, statistically, more rising prices, with the  median price for the first five months of this year up 15.0% over the same period in 2012 to $253,000.  Fifteen percent. 

We have more pending and closed sales, and inventory remains low with 2.5 months of inventory city wide.  That means, at the current rate of sales it would take 2.5 months to sell the properties currently on the market.  In some of the close-in neighborhoods, we see this well below 30 days.   Pending sales increased 1.2% from April 2013 and 18.1 from May 2012.  Closed sales are up 26.2%  over April 2013 and 27.8 % over May 2012.

And our average market time remains low at 85 days, down from 91 last month.   This is an average, so imagine how quickly the good ones are actually selling.

Interest rates are slowly on the rise, as they should be.  For a 30 year fixed rate, one might expect a 4.125% rate, 3.375 for a 15 year rate.  These are still great rates, probably the lowest we'll see in the coming years.  Rising rates, though, do tend to light a fire under "on the fence" buyers...

If you've been thinking of selling, now is a pretty good time.

See the full report.

Sunday, June 9, 2013

Sometimes scary electric panels

Those old Portland houses I love so much, didn't have electricity way back when.  And then in dribs and drabs, knob and tube wiring, connecting to through fuse boxes, were installed.  Power surges, peaks in demand and such, would cause a fuse to blow - a good thing as it prevented over heating and fires.  To restore electricity, one would replace the fuse. 

In the 1950's (mostly) folks started replacing the fuse box with circuit breakers.  In a power "issue" the breaker would flip, cutting off power to the affected area.  Rather than replacing a fuse, the breaker would merely be flipped back into position to restore electricity. 

For years, twenty four in my case, in selling an old home, we'd be relieved to see any form of circuit breaker box, as opposed to fuses.  But also for years, almost as many, we've heard circuit breaker panels made by Federal Pacific have issues.  To a homeowner, the issue with a breaker would be that it flips to often or unnecessarily.  But you want the circuit breaker to flip when needed.  The Federal Pacific panels have been known not to flip, or trip, when they should.  Ack. This poses a huge fire risk.

In addition, we are hearing that even "good" circuit breaker panels age out, or wear  out.  I've been told the reasonable life expectancy of a circuit breaker panel is about fifty years.  Many of those early circuit breaker panels had a pretty small capacity of 60 or 100 amps.  And as we consume more electricity, many folks have upgraded their panels to accommodate 200 amps of service. Often  circuit breaker panels are upgraded in remodels and additions.

 Other safety features have shown up in the newer boxes, including a "main disconnect" by which one can shut off all the power to the house by flipping one switch. We're also seeing whole house surge protectors (rather than those things you buy at Office Depot to protect your electronics) and whole circuits protected by a ground fault circuit interrupter (rather than GFCI's on individual outlets).

I have facilitated real estate sales where a Federal Pacific panel is replaced as part of the buyer's repair request.  I have not yet seen a buyer request a non-Federal Pacific, but old panel be replaced just because of age.  I do wonder if this is on the horizon.