Sunday, May 25, 2014

It’s all things Indy 500 this morning…



My kids and I are relaxing around the house this Sunday morning with the historic Indianapolis 500 on the TV.  This is the 98th running of the race.  I was fortunate enough to attend two of the races back in college in the early 1990’s.  The University of Toledo is only about three hours from Indianapolis so a group of us made the road trip and watched the race from the infield mound…what an epic experience and such a blast.  I would love to take my kids to the race in a couple years for the 100th Anniversary.  Instead of a three hour drive, it’s now a three hour flight, but I think would be well worth the trip.  Both my son and my little girl love cars like their Dad.

While the race was on, we looked up a lot of interesting facts about the race.  It’s awesome that the cars travel at an average speed of 187 mph, reaching around 230 mph at times on the straight away.  Fortunately the last fatality at the race was back in 1973, a year after I was born, although I know there have been some horrific crashes in more recent years. 

Here are a few great reference sites that I found about the race.  Enjoy race fans!




 


 

Wednesday, May 21, 2014

Determining the value of residential real estate – an Appraiser's Perspective…



I am both a Realtor as well as a Certified Residential Appraiser.  While I assist both buyers and sellers with the purchase or sale or real estate, I also have many clients that hire me to perform appraisals on residential property.  I am often asked how an Appraiser determines the value of a property.  Frankly, that is a very good, and simple, question.  Our homes tend to be our biggest investments so it does not surprise me that there are a large number of people and clients that are very curious about the process of determining the value of their home. 

Unbeknownst to most, there are many different appraisal products.  The most common report is the uniform residential appraisal report that is used for banks and mortgage companies when we borrower against property for the purposes of obtaining a purchase money mortgage or when refinancing real estate that we already own.  Interestingly, there are numerous other products that appraisers utilize for different purposes.  When we were in the recession back in 2008-2011 approximately, the great majority of appraisals completed during that time were either REO (Real Estate Owned) Appraisals for banks when they were foreclosing on homes or standard market value appraisals to help lender’s determine the value of  property that they were considering for a short sale transaction.  To rewind quickly, an REO property is a property that a bank has foreclosed upon and now owns as a result of that foreclosure process.  Once the bank forecloses on the property, they now need to market and sell the property so they first and foremost hire a Licensed or Certified Appraiser to complete an appraisal on that property so they know what it is worth and have an idea of what they can market and sell it for.  A short sale is when a borrower goes to their lender and asks them if they can sell the property for less than what the mortgage amount and if that lender is willing to forgive the deficiency, or the variation between what the home is worth and the mortgage balance.  REO’s and Short Sales were very common for some time and are now much less common with the improved market conditions.

Other appraisal products are used to determine the value of property for estate purposes, in divorce, bankruptcy, and for Realtors when attempting to list or sell a home.  This last product is something that I find valuable to my Realtor clients and friends because I provide for them a unique and specialized perspective on the market, being that I too am a Realtor as well as an Appraiser.  But again, it is a slightly different appraisal product than some of the others mentioned.  There are full appraisal products that require an inspection of the property, there are exterior only appraisals that can be completed with just a view of the property from the street, and there are also desktop products where the value of a property is determining strictly based upon data without visiting the property. 

Now, to get to the main point and question – how is value determined.  To answer, I am going to provide a simple example using a standard home in a standard type subdivision of fairly similar homes.  This will help with understanding the process as it becomes increasingly complicated when dealing with more unique properties in more unique market areas, although the methods applied are similar. 

A standard bank appraisal will require three recently sold comparable properties as well as at least one or two pending or active listing comparables.  When I say comparables, what I mean is a similar home that sold recently nearby.  The similarities that I am looking for are age, size or square footage, bed/bath count, features such as garages and pools, lot size, similar design, and lot location.  As far as the timing of the recent sales, lenders typically require that one or two of the sales has occurred within the prior 90 day period and no older than 6 months prior.  For distance, the standard for most metro areas is sales within a one mile radius.  The best comparable would a home that just recently sold, perhaps on the same street or within the same subdivision that is the same age and size, with similar amenities and features.  Another important factor when considering a comparable sale is condition and level of upgrades.   

All of these factors mentioned are considered when determining which comparables to use within the appraisal report.  In metro areas that are very active like Phoenix and Scottsdale, it tends to be easier to locate good comparables to use within the report.  Once we have determined which comparables would be best for our report, we proceed with making adjustments for differences between the subject property, which is the home that we are appraising, and the comparables.  The better the comparable, the less adjustments required. 

When appraising more unique properties such as large estates in Paradise Valley for example, the parameters and complexities grow significantly.  Also when appraising rural properties on the outskirts of the city, it can be difficult to locate similar and recent sales nearby, therefore the parameters are expanded. 

Once all of the comparable data is put together within the report, we can begin to determine what the value of our subject property.  Appraisers also look at what the local market is doing in terms of appreciation, depreciation, sales volume, external economic trends, and environmental influences.  All of this information and data is considered when determining the final value estimate of our subject property.  This approach to determining value is known as the sales comparison approach, or the market approach.  This is the most common and effective means to determining value for residential property.  There are a couple other methods that are sometimes considered – the cost approach which utilizes construction data to determine the value of reproducing or replacing the improvements and the income capitalization approach which considers income that a property may generate to assist in determining its value. 

I enjoy the process of determining a property’s value very much.  It includes visiting and inspecting the home, measuring it to determine its square footage, and driving the neighborhood.  Once the physical inspection is completed, then it’s back to the office to analyze the data and put the report together.  A typical residential appraisal, with some pre-printed forms along with all of the added data, photographs, charts, and sketches can easily exceed 30 or 40 pages and can take anywhere from 3-5 hours to complete. 

Value is always changing.  A home that I appraise today will likely have a different value in six months or a year.  Property value can change daily depending upon economic and environmental factors.  As such, an appraisal, or determination of value, is a product and service that will always be needed.








 



 

Friday, May 9, 2014

APR-2014 Newsletter by Andrew Ament


Welcome to the most current Housing Trends eNewsletter. This eNewsletter is specially designed for you, with national and local housing information that you may find useful whether you’re in the market for a home, thinking about selling your home, or just interested in homeowner issues in general. 

Please click on this link to view the Housing Trends APR-2014 Newsletter http://thescottsdalerealestateguy.housingtrendsenewsletter.com 

The Housing Trends eNewsletter contains the latest information from the National Association of REALTORS®, the U.S. Census Bureau, Realtor.org reports and other sources. 

Housing Trends eNewsletter is filled with local and national real estate sales and price activity provided by MLS’s and the National Association of Realtors, U.S. Census Bureau key market indicators, consumer videos, blogs, real estate glossary, mortgage rates and calculators, consumer articles, and REALTOR.com local community reports. 

If you are interested in determining the value of your home, click the “Home Evaluator” link for a free evaluation report: 

http://thescottsdalerealestateguy.housingtrendsenewsletter.com/dispContent.cfm?loadid=2&loadtype=0 

Sound decisions can only be made with accurate and reliable information, and I am happy to be a trusted resource for you. Thank you for the opportunity to provide you with this monthly eNewsletter, and I look forward to answering any questions you may have and to the opportunity to be your REALTOR® in the future. 

Sincerely yours, 

Andrew Ament
Realty One Group
17550 E Perimeter Dr #160 Scottsdale AZ 85255 480-285-0000 o | 480-540-5151 c