New Property Evaluation

Hi Mike,

Glad to hear from you this morning. Listen, I’ve put up a real estate facebook page and a real estate blog – I’m trying to post semi-regularly – which means, when I have time and when I have a topic that needs to be addressed. And this is a topic that begs addressing. Check it out http://kdsfarm.blogspot.com or you may just visit KDMcCall.com and click on the blog link. For Golden Valley I’m still posting, you can visit the GoldenValleyNC.com and click the blog link there as well.

Sitting at my desk with my morning coffee, I've been looking at short-sale information. A whole lot of us are upside down on our properties and I think as these tax valuations come out this is going to be the case. I just got our evaluation yesterday and it's about what we owe on our note. If we had to sell, had to add a real estate commission to the tax value, we'd be underwater. It's unusual for tax value to be greater than market value, but  in Bostic, from October 2010 to October 2011 that was the case for 90% of the properties sold.

But let me get on to your question. Why did the county evaluate your two properties so differently? My guess is that there are two different appraisers. That’s very much a guess, as I do not have access to their criteria, and a certain amount is subjective. Like the client who asked this morning, could I maybe get a long term rental? How long is long term?

Same with large rooms, quiet neighborhoods, and expanding waistlines – I would submit that all are subjective.

So, my response is conjecture. But I have a report that shows a certain amount of criteria the appraisers are using for their evaluation, it is much the same a real estate agent uses for a comparable market analysis (CMA). Much of what we do is subjective, like grading lumber, yes there are some hard and fast rules, but there’s a lot of leeway, too. One of the huge problems I have doing CMA's is I am not a person who sees an acre in an acre. I see the view, I see the hardwoods, I see the view-shed, I see the contours, I see the building site, I see the HOA, I see the roads and drives, can you get highspeed Internet, cable TV, cell phone service? I see an acre very differently than, say, an investor, or a builder or the developer's salesman.

A couple of weeks ago, I heard from a homeowner who had purchased a foreclosure and the county was valuing the house at more than the sales price, way more. The homeowner was upset and intended to appeal. I explained: the county is taking into account surrounding property values, replacement costs, just because you bought your house at $29.50 on the square foot doesn’t mean it’s actual value is $29.50 per square foot. You got a deal – right? It’s like this – let's say you bought a car from your brother-in-law in SC for $565.00, it’s worth $4,000 according to Kelly Blue Book. When you bring that car into the state of NC, is it now worth $565.00? Of course not, and we all understand that. Well, it’s the same for real estate.  And why would your brother-in-law sell you a car for $565.00? Maybe because you conceded the dining room suite in the estate sale, the one your wife’s sister was so keen on. Maybe, maybe not…You got a deal. That doesn't change the value.

Why did the county evaluate your two properties so differently? The honest answer is I don't know. Will it hurt to appeal? Hmmm. Let me remind you that 90% of the property in Bostic in 2011 sold for less than tax value. If that continues through 2012, how will that affect your market value, and is that important to you?

I've been answering questions in blog posts when the topics are like this one, timely, relevant, and like the insurance issue, are about something you and I need to know about. (See: GoldenValleyNC's Blog - mapping service some of the insurance companies have subscribed to - are you more than 5 miles from the fire department). See February 10th at http://goldenvalleync.blogspot.com/.

It's nice to have something to write about this morning. Thank you for your timely, relevant, newsworthy question. It's questions like this that make the real estate blog worthwhile. Enjoy your weekend!

Let a REALTOR Guide You

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CrackerJack Agent - Article Profile - How to Calculate Capital Gain

CrackerJack Agent - Article Profile - How to Calculate Capital Gain

In this straitforward piece, Jennifer Pendzick shows you how ro calculate capital gains. You may be much better off with a 1031 Tax Exchange, but be advised this has to be done BEFORE you sell your property. If you've already closed, you're too late.

Strategic Default Help - Foreclosure Protection - Strategic Default Assistance

YouWalkAway.com Featured On 60 Minutes You Walk Away - Strategic Default Help - Foreclosure Protection - Strategic Default Assistance

How Much Does It Cost To Buy A House?

"Exactly how much money would that be with closing and other cost?"

This is a question from an actual email I received this week, and it's not the first time I've addressed the question. The answer is not as simple as you might think, because it depends, it depends on a lot of things. But here goes, here's my answer, if I've been vague or left you with questions, call me. I'll answer your questions and edit this post for clarity. I have always said these things should be taught in High School, but until they are, let's work together.

How  much exactly will depend on several things, and it will largely depend on what kinds of loan you qualify for. The loan I told you about is an FHA Loan. I put a mortgage calculator on my blog, just for you, so you can play with different scenarios.  http://kdsfarm.blogspot.com/ .

Now, remember when you’re looking at this PITI. The acronym, p-i-t-i, stands for principal, which is the principal amount of the loan, the first i stands for interest, that’s what you’re going to see with a fully amortized loan, that’s the figure the calculator on my blog will give you, the principal and interest. But there’s more… the t stands for taxes, which in this case (on $114,000) is $551.00, and the second i is for insurance.


The lender will escrow – in other words collect and hold – money to pay interest, taxes, and insurance. They don’t want you to get behind, they want to start you out ahead so when you buy the house and go to closing they will hold 3 months. They'll break it down into a monthly amount… let's take the taxes: $551 divided by 12 = $46.00 which will be added to your payment. And so will your homeowner’s insurance (required on a mortgaged home). I don’t know how much that will be without calling your insurance provider or calling one for you. That's another thing that depends. I have a nice deal with Allstate because I have my cars and my homeowner’s with them. My lender, Bank of America collects the taxes and insurance from my payment and pays those bills on my behalf. You’ve heard people talk about their house payments changing? This can be because insurance and taxes fluctuate. There’s another reason a loan amount may fluctuate it's called an ARM, which stands for an adjustable rate mortgage. That’s when you get a super-duper interest rate, but the rate adjusts with prime. And right now prime is  low so ARM’s are not a good option. There’s also an interest only loan, again, that’s not a good option for an average home buyer either.

Another thing how much will depend on is how much are you going to put down on the home? If you put down the minimum to qualify assuming you paid full price for this house (and we’ll talk more about that when you hire me as your Buyer's Agent) at $114,000 the down payment would be $3,990. There’s may also be a fee, called a loan origination fee, aka points, on a bank loan.

I found this really super link to the Federal Reserve Site: http://www.federalreserve.gov/pubs/settlement/ with a Settlement Costs Worksheet! Have a look at that.

Here’s the thing, buying a home seems like an awful lot, but in an effort to cover every little thing, well, you have to cover every little thing. A real estate agent should be well versed in these things and should be able to help you make a good decision.

Have you ever heard of Truth in Lending? Each and every real estate transaction will have a HUD Statement. This breaks down the exact costs. The closing attorney, the attorney you pay to handle the transaction, he’s YOUR attorney by-the-way, he or she will prepare a closing statement, and cover it line by line to make sure you understand exactly what each cost is. Your real estate agent should cover these items, too, so there are no surprises at closing.

If your grandmother is going to give you some money for closing, that’s OK as long as it’s a gift and does not have to be repaid. Mortgage companies do not allow you to borrow your down payment. You have to have some cash on hand, to buy a house. $5 or $6,000 on a house in this price range ($100,000) will take you a long way.


Now, it's time for you to go to your bank. That's the best place to start. Call your bank and find out if they loan money for mortgages. If they don't I can send you somewhere else. Even if they do you might want to check around and see if you can get a better interest rate or a lower loan origination fee.


So, how much does it cost to buy a house? It depends, it depends, it depends.



Realtor.org - Research Commentary

Wrapping up 2011, NAR chief economist, Lawrence Yun, reports the rise of existing-home sales. Record low mortgage interest rates and lower sales prices have continued to entice buyers. Are we on our way to a sustained recovery? See Lawrence Yun in this 2011made for REALTOR TV video.

And in this YouTube video, a commentary by Yun following the unpresidented housing boom and bust "700 billion here, 800 billion there..."  Now, the mortgage interest deduction has become an issue.

Reasons People are Buying Homes Today

The second most common reason people cite for buying a home now is affordability. What's the first reason? Find out here:

Primary Reason for the Recent Home Purchase

On January 11, 2012, in Did You Know, by T.J. Doyle, Marketing & Communications Manager a blog post was added to the Economists' Outlook Blog, which follows housing stats from the National Association of Realtor's esperts.