FHA Appraisals and the Rules

Lately in my area there has been a tremendous amount of miscommunication and misinformation with FHA appraisals.  It is so rampant in our area that I've decided to post the drama.

Schaumburg IL - Townhouse listing of mine does not appraise out and is $5000 under contract price.  Seller does not want to sell at the appraisal price and the buyer doesn't want to pay the contract price. Deal dead which is easy enough.  Buyer #2 comes along with their overzealous buyers agent, let's call her 'Gloria Go-Getter'.  She's overcaffinated, overconfident, never listens to what is being said and is constantly on her 'crack berry' answering those important emails.  Buzz, buzz, buzz, there she goes.  

After negotiating this new offer at the appraisal price (I surprised her with that BTW) she said, sure I guess we'll use it.  You guess?  Sorry Gloria, the appraisal is good for 6 months on the property so yeah, we're gonna use it.  Then the contract goes to the also overcaffinated loan officer, 'Busy Bruce', who begins the conversation with - "You don't know what you're talking about, I want a new appraisal done".  So now we have Gloria Go-Getter and the loan officer telling me I am blocking the contract by not letting a new appraiser into my listing.

Now I'm thinking to myself, this can't be happening right?  This FHA appraisal guideline is as old as dirt, how can they not know about it?  Well it turns out that the loan officer wanted me to manipulate the FHA system that assigns the appraisals and case numbers.  The loan officer is telling me that the appraisal no longer has a case number and they don't want to use it.  Well I get the original appraisal from the original loan officer and indeed there's that case number and all the appropriate information necessary to make it valid.  Hmmmm.

Did the buyers agent and the loan officer plan this?  I think that having the appraisal already done was not in their collective game plan.  I think what they expected was that the townhome would not appraise out and the price would be adjusted downward.  Their only option was to fight the current appraisal.  Problem is, we can't just get another new FHA appraisal on a property and I wasn't going to do anything funny with the FHA assignment system.

Besides, I've heard that the federal penitentiary accommodations would not be adequate enough for little 'ole me.  

I've uncovered some interesting things from the FHA Help Line (FHA Connection) and they were very courteous and answered all my procedural questions.  I wasn't loosing my mind and indeed the appraisal was still valid and in the system.  Why all the drama?  Was I just supposed to forget about the 1st appraisal?  Why would I just ignore it?

What would the penalty be if I did turn a blind eye?  So the deal finally closed and I can honestly say I'm not sure what this agent was trying to accomplish.  All the way to the end, she was adamant that we didn't have to honor the appraisal.

I'm not gonna miss Gloria Go-Getter.

  

Heating and cooling adjustments on a forced air furnace - Winter and Summer Settings

Warm air rises; cooler air sinks. Keep this principle in mind, and you’ll realize why opening the correct air returns in winter and summer will provide better air distribution-which, in turn, allows more even temperatures in your home.

When you use a forced air furnace for summer cooling, you should open the high returns. This allows the furnace to take warmer air from the top of the room back to the air conditioning cooling coil in the furnace. In the winter, open the low returns to collect cold air at the floor.

For a two-story home, you may also need to adjust the supply air for winter and summer.  In the winter, warm air rises to the second floor, so less heating is required there.

In the summer, warm air still rises, and a hot attic adds even more heat, so you need greater cooling (air flow) to the second floor than to the first floor.

The best way to control air flow is to adjust the small dampers in the heating/cooling duct system in the basement. Often, these dampers are found where round supply duct runs connect t o the main (rectangular) ducts. Look for small (¼-inch) threaded rods and wing nuts. You can adjust the damper by turning the screwdriver slot on the small rod. When the slot is parallel (going the same way) to the duct, the damper is fully open. You don’t need to adjust the wing nut, which simply locks the rod into place.

Heating ducts vary. Some systems have levers indicating the direction of the damper. Some rectangular ducts have dampers and levers.

To adjust air flow for summer cooling, start by fully opening all second floor dampers. Next, partially close dampers to first floor rooms that are getting lots of cold air. You will find that closing the damper to 50% or turning the shaft to 45 degrees will only partially slow the air flow. Often, even if you fully close the damper, there will still be air flow because the dampers fit very loosely in the ducts.

Closing first floor dampers will direct air to the second floor. Mark your damper settings for summer and winter once you have found the correct balance.

Remember to clean the furnace filter, too, because a plugged filter can also restrict air flow.

Older homes were not built for cooling - the supply and return ducts to the second floor may not be adequate so adjustments may not solve the problem. A quick fix may be to run the fan furnace continuously.

I just moved into a new home recently and I had a 'mini melt down' on the 2nd floor.  It was just too hot all the time!  Went on the internet to find these settings which used to be marked right on my old furnace!  Guess what - no marks, no nothing on the new furnace, so my guess work began.  It actually took me quite a bit of work and research to find these directions so hope you can make use of them in your home.  

Happy heating AND cooling!

Well here's a kick in the head ......

I recently cancelled a listing that I had for some time because the seller just would not lower the price.  All the signs were that since she didn't have a fireplace, she was being overlooked at her price.  Townhomes with fireplaces were getting regular showings and this one didn't have a showing in 30 days!  We had to adjust our price for wanted features that we didn't have.  

Seller said no way, they can just make an offer as we've all heard that before.  "Lowering my price won't make a difference and everyone knows they can just make an offer in this market."

Well, as always I check the new listings everyday in the MLS and who should appear?  Ms. I won't ever reduce my price!  Here's that kick in head - she's $13,000 lower than I had it.  I'm quite sure at that price, it's going to sell right away.  Now at the new price it's below the current market value and with the newer carpet she put in, I'm confident an offer will be in her hands soon.

But, what was all the fuss, fighting and digging in her heals all about?   I was only looking for $2000 to bring her more in line.  I'd have to say the other agent was a better sales strategist than myself because she got the job done and got the seller down below what she needed to be at.  She did a great job.

I'll certainly be putting it on my list for future showings.  Just don't understand what Ms. Seller was thinking here?  It cost her alot of valuable market time.

Congress has passed new legislation that extends the First-Time Home Buyer Tax Credit of up to $8,000 to first-time home buyers until April 30, 2010.  Also expands the credit to grant up to $6,500 credit to current home owners purchasing a new or existing home between November 7, 2009 and April 30, 2010.

Here is the basic information and guidelines about how the Extended Home Buyer Tax Credit can help you purchase a home.  If you have specific questions or need additional information, always seek out a tax professional or the Internal Revenue Service at 800-829-1040.  But here are the basics:
 

Who Qualifies for the Extended Credit?

First-time home buyers who purchase homes between November 7, 2009 and April 30, 2010. To qualify as a “first-time home buyer” the purchaser or his/her spouse may not have owned a residence during the three years prior to the purchase.

Current home owners purchasing a home between November 7, 2009 and April 30, 2010, who have used the home being sold or vacated as a principal residence for five consecutive years within the last eight.


Which Properties Are Eligible?

The Extended Home Buyer Tax Credit may be applied to primary residences, including: single-family homes, condos, townhomes, and co-ops.

How Much Credit is Available?

The maximum allowable credit for first-time home buyers is $8,000.  The maximum allowable credit for current homeowners is $6,500.

How is a Buyer's Credit Amount Determined?

Each home buyer’s tax credit is determined by two additional factors - The price of the home and the buyer's income.

What is the maximum price I can purchase?

Under the Extended Home Buyer Tax Credit, credit may only be awarded on homes purchased for $800,000 or less.

What is the maximum Buyer Income?

Under the Extended Home Buyer Tax Credit effective on November 7th 2009,  single buyers with incomes up to $125,000 and married couples with incomes up to $225,000 may receive the maximum tax credit.

If your income exceeds these limits, can you still get a credit?

Yes, some buyers may still be eligible for the credit.

The credit decreases for buyers who earn between $125,000 and $145,000 for single buyers and between $225,000 and $245,000 for home buyers filing jointly. The amount of the tax credit decreases as his/her income approaches the maximum limit. Home buyers earning more than the maximum qualifying income—over $145,000 for singles and over $245,000 for couples are not eligible for the credit.

Can a Buyer Still Qualify If He/She Closes After April 30, 2010?

As long as a written binding contract to purchase is in effect on April 30th 2010, the purchaser will have until July 1st, 2010 to close.

Will the Tax Credit Need to Be Repaid?

No and Maybe. The buyer does not need to repay the tax credit, if he/she occupies the home for three years or more. However, if the property is sold during this three-year period, the full amount of the credit will be recouped on the sale.

Appeal data for Elk Grove Township is due Nov. 18th, 2009. Please make sure all your data is submitted in a timely manner.

 
October 2, 2009 – Cook County Assessor Jim Houlihan announced today that residential property owners in Elk Grove Township were mailed notices reflecting a reduction in the assessed values of their properties. The impact of these reductions will be seen in second-installment tax bills payable in the fall of 2010.

"The situation we are facing in the real estate market is extraordinary, and the downturn has had an impact on home values," Houlihan explained. "After analysis of market sales and foreclosure data, we determined that Elk Grove Township homeowners should not have to wait until their properties are reassessed next in 2011 for the downturn to be reflected in their assessments."

Normally, properties are reassessed and receive notices every three years. The north suburbs are not scheduled to be reassessed again until 2010; the south and west suburbs will be reassessed next in 2011. This year, the City of Chicago will be reassessed.

Due to this first-ever downward market adjustment, residential properties in each suburban township will receive adjustments of their assessed values. A 7% decrease will be applied to the assessed values of all residential properties located in Elk Grove Township.

The deadline to file appeals for properties located in Elk Grove Township is November 3, 2009 (now extended to November 18th).

These market reductions come as the Assessor’s Office is implementing the 10/25 Ordinance, a measure passed by the County Board last year which was designed to simplify assessment levels. Homes will now be assessed at 10% of market value. Commercial and industrial properties will be assessed at 25% of market value. All Cook County property owners will receive notices telling them of the changes in assessment levels this year.

"If Elk Grove Township taxpayers want to appeal their proposed assessments, we encourage them to do so online," Houlihan said. "Our newly redesigned Web site is easy to navigate, contains a wealth of information, and makes it easier than ever to appeal a proposed assessment."

Cook County Appeal Forms

The 3 Things you should know about Condition ~

This is a series regarding the most popular question that I receive from people about real estate?  What’s the #1 tip that I could pass along?

Well there’s actually 3 things that are enmeshed together –  Condition, location and price.  All 3 actually make your home either sell or be rejected by prospective buyers.  Here's how to have your home be in the buyers favorites!

Condition -

Avoiding Home Preparation Mistakes

Getting your house ready for market goes beyond making the beds and washing dirty dishes. Although I've seen plenty of homes with toys scattered throughout and dishes piled in the sink; buyers can't get out of those homes fast enough.  Read up on the essential steps to be taken on preparing the home for sale.  Some homes need updating and quick fixes.  Doing repairs before resale can boost chances of quickly selling. If items are broken or buyers see deferred maintenance, they wonder what else is wrong.  It's more expensive, actually, not to fix the house.

Phrase to remember:  Buyers only know what they see - not the way it's gonna be!

Another phrase to remember:  "Facts do not cease to exist because they are ignored" ~ Aldous Huxley

Dressing your home for showings is called 'staging a home'. Think of the process like arranging flowers in an attractive vase.  If you or your agent lack the vision or ability to stage, consider hiring a professional home stager.  It is absolutely worth the effort and the price because your home will sell faster in any marketplace!

Common Marketing Mistakes

Whenever I see badly shot photographs in the MLS, or it's the only photo, I want to scream at the agent, 'What are you thinking?'  But agents and sellers make plenty of marketing mistakes beside bad photos.  Do you realize that there are sites and blogs that actually post these photos under 'worst photos of the week' and 'how not to take a photo like this'.  And my personal favorite 'cave of the week'.   

If photography isn't your strong point or your agents - hire a professional.  Marketing now begins on the internet, before the buyer even gets near your home.  My advice is to get samples of what and how the agent is going to present your home with virtual tours, widgets, and online ads.  If the agent can't show you or provide that info - run the other way and get another agent!

Some sellers loudly lament: 'Why isn't my home selling?'  These are likely sellers who are not employing marketing strategies designed to expose a home to the largest pool of buyers or are avoiding the preparation tips before the home went on the market.  Buyers have a lot of choices - think why should they choose yours?

Once a buyer has entered a home, the marketing continues.  A strong listing agent plays up the good features of a home and downplays the negative - that's selling.  Make sure your agent provides as much information to the buyer as possible so they can make a good, informed decision.  I can't tell you how many times I've shown a home and it takes up to 3 days to find out the age of the roof or other vitals that should be readily available to the buyers.  It's basic questions that most buyers want to know - age of roof, age of furnace, age of AC, age of appliances.

Hiring the Wrong Agent

You can hire a good listing agent or a mediocre agent.  They all cost the same.  You don't have to hire your brother-in-law that 'dibbles and dabbles' in real estate or your daughters friend that 'just started in the business'.  This is the largest personal investment that you have - interview agents and hire a full-time professional with a minimum of experience that you feel comfortable with.  Think of it this way - do you want a new agent practicing on you?  

If you want full-service, then hire a full service agent.  Also, learn the difference between Realtors® and real estate agents, they are not the same.  Ask an agent why they are not a Realtor®?  Think of it as a 'professional labor union with a code of conduct and ethics'.  What would be a benefit for them not to join?

Carefully read the listing agreement to make sure the agent who brings a buyer is fairly compensated because one surefire way to make sure an agent won't show your home is to offer a silly commission percentage.  In a competitive market like now, often buyer agents are paid a 'bonus' commission percentage.  It is an additional 'incentive' to show your home first before the others in the same price range.

Be sure your home is in top marketing condition.  Be sure that your home is getting all the expose it deserves.  

Remember that ‘3’.

   Lyn Sims (847)230-7324

   RE/MAX Suburban

Selling Advice on Price
Selling Advice on Location

I proudly serve and sell real estate in the Northwest Suburbs of Chicago.  If you are thinking about purchasing or selling your home in the communities of Schaumburg, Hoffman Estates, Elk Grove Village, Roselle, Palatine, Medinah, Itasca, Bloomingdale, Carol Stream, Bartlett, Hanover Park, Streamwood, Elgin, South Elgin, St. Charles and more importantly, want to work with a local area expert, contact me immediately.

All data and information provided on this blog is for informational purposes only.  Lyn Sims makes no representations as to accuracy, completeness, correctness, suitability or validity of any information on this site and will not be liable for any errors,
omissions, or delays in information or any losses, injuries, or damages arising from it’s display or use.

Home Selling Advice on Condition ©2009 Lyn Sims - RealEstateConsumerInfo.com  - RealEstateBuyMe.com

The 3 Things about Location ~

What’s the most asked question that I receive from people about real estate?  What’s the #1 tip that I could pass along?

Well there’s actually 3 things that are enmeshed together – location, price and condition.  All 3 actually make your home either sell or be rejected by prospective buyers.

So a real estate mantra in case you don't know it is:

Location, location, location!

There's that 3 again but there is a reason that it is used over and over.  Nobody listens!

The location of your home makes a 'price' difference to buyers from the town that it's in, the street that it's on and the school district the kids will be attending.

Obviously different towns have different socio-economic benefits for living there.  Maybe you need the train to go to work?  Maybe you've grown up in the city and want your kids to run around and play soccer in the best park district - all these reasons encompass location.

So this portion of the series really will ask you to take a step back and look at your home with a critical buyers eye.  Do you have a good location?  

Is it safe?    Is it quiet?    Is it in the middle of the subdivision across from a park?    Walking distance to schools?    Close to expressway access or public transportation?    Golf Course view?    Wooded view?

After answering these questions if you find yourself saying:

 'No the jet noise doesn't bother me at all - what did you say again?'

'No the berm is not a problem for me because now you can't see the garbage dump (aka the recreation ski hill and mini-mountain range) from here!'

That's a location issue that effects your price.  If you take 2 similar homes and put them side by side as a buyer will do, which home would you choose?  Come on, be honest?

Each location issue will pose a difference in the price.  Buyers will either except or reject your location based on your price just like they would consider other features like a basement or number of bedrooms.


Be sure your home is set at a competitive price based on your location.  Remember that ‘3’ and say it one more time - location, location, location!

    Lyn Sims (847)230-7324    

    RE/MAX Suburban

Selling Advice on Price
Selling Advice on Condition

I proudly serve and sell real estate in the Northwest Suburbs of Chicago.  If you are thinking about purchasing or selling your home in the communities of Schaumburg, Hoffman Estates, Elk Grove Village, Roselle, Palatine, Medinah, Itasca, Bloomingdale, Carol Stream, Bartlett, Hanover Park, Streamwood, Elgin, South Elgin, St. Charles and more importantly, want to work with a local area expert, contact me immediately.

All data and information provided on this blog is for informational purposes only.  Lyn Sims makes no representations as to accuracy, completeness, correctness, suitability or validity of any information on this site and will not be liable for any errors, omissions, or delays in information or any losses, injuries, or damages arising from it’s display or use.

Home Selling Advice on Location ©2009 Lyn Sims - RealEstateConsumerInfo.com  - RealEstateBuyMe.com

The 3 Things you should know about Price ~

What’s the most asked question that I receive from people about real estate?  What’s the #1 tip that I could pass along?

Well there’s actually 3 things that are enmeshed together – Price, condition, location.  All 3 actually make your home either sell or be rejected by prospective buyers.

Price - Obviously in this market with the elevated inventory you have to be ‘spot on’ with your homes price.  Too high and no one will take your home seriously and it will be passed over.  Too low?  Well that really doesn’t happen too often except in distress sales, foreclosures and the like.  A fair price – what a seller is willing to accept and a buyer is willing to pay.  That’s what we normally strive for.

When an agent puts your home on the market, it has to be sold three times.

The first sale is to my peers, the other REALTORS® and agents who are in the market everyday. They need to be excited about the price or they simply ignore the listing because it's often a waste of their time to show it to buyers who won't pay that price.

The second sale is to the buyer, and they compare your home to the others they're looking at in the marketplace comparing features and benefits that are important to them.

The third sale is to the appraiser for the lender. Even if we're lucky enough to get a higher than market price from a buyer, the appraiser compares the sale with past sales in your neighborhood and their appraisal usually hits right at the market price.

Now let’s think about this question for a moment - if you bought a home and the appraisal came in lower than what you paid, what would you do?  How would you feel as a buyer?

I'll tell you what normally happens from past experience, the deal falls through and we begin the whole process all over again.  Start again at square one, we’re back on the market baby!  How would you feel about that?

Be sure your home is set at a competitive price.  Remember the ‘3’.

  
  Lyn Sims (847)230-7324 RE/MAX Suburban

The 3 Things you should know about Condition
The 3 Things you should know about Location

I proudly serve and sell real estate in the Northwest Suburbs of Chicago.  If you are thinking about purchasing or selling your home in the communities of Schaumburg, Hoffman Estates, Elk Grove Village, Roselle, Palatine, Medinah, Itasca, Bloomingdale, Carol Stream, Bartlett, Hanover Park, Streamwood, Elgin, South Elgin, St. Charles and more importantly, want to work with a local area expert, contact me immediately.

All data and information provided on this blog is for informational purposes only.  Lyn Sims makes no representations as to accuracy, completeness, correctness, suitability or validity of any information on this site and will not be liable for any errors, omissions, or delays in information or any losses, injuries, or damages arising from it’s display or use.

Home Selling Advice on Price ©2009 Lyn Sims - RealEstateConsumerInfo.com 

So with much fanfare we have the 'new' tax credit that should be signed shortly by the President. This post was written by Claudette Millette from Ashland MA and I think that this post gives most of the guidelines that you will need.

So the deadline for this tax credit will be:  Purchase contract by April 30th and close by June 30th, 2010.

Let's get out there and start looking today!  I know where there are some fantastic deals I'd love to show you!