Mary Thompson Lake Lanier Appraiser in Georgia

The short answer is NO to both questions, not if it your home is tastefully decorated. There is such a thing as "Holiday Curb Appeal". Most people realize that during the holidays people decorate their homes inside and out and most people like homes that are decorated. When selling your home it is a plus for potential buyers to envision just how their decorations and trees will look in their "new" home. The more they can "see" themselves in your home, the better the chances are for selling your home to that buyer.

So decorate tastefully and if in doubt ask your local realtor which homes in the area have great holiday curb appeal, then drive by them and see for yourself. Holidays should be a time for fun and excitement, so give your potential buyers all this and more when they pull up to your home.

Bake breads or cookies before showings to give the potential buyers that real at home feel. The sense of smell is the most powerful memory booster. People smell fresh baked goods and it usually conjures up some really wonderful memories for them. Don't forget to give the appraiser some home baked goodies! Just kidding, buttering up the appraiser will NOT get you a higher appraised value...but I am sure you already know this!

Not big into baking? Try a little tip - place a little dab of vanilla extract onto the top of your light bulbs on your lamps and once the lamps are lit for a few minutes it will smell like a something is baking in the oven.

So go ahead and decorate to your hearts content, enjoy the holidays and you may just get yourself a buyer.

Happy Holidays everyone and come on back for more tips during the holidays if you are trying to sell your home during this special time of year.

Photo above provided by www.inmagine.com

Mary Thompson your North Georgia Real Estate Examiner. Click Here

Obama wants to hold off foreclosures for 90 days for those who have loans with lenders who are part of the bail out plan and have lenders basically work with lenders to renegotiate these existing loans and swallow loses that will come out of these renegotiations. It may come down to judges calling the shots on these loans

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McCain wants to buy up these bad loans and have lenders provide new less expensive mortgage notes that people can afford to pay and keep them in their houses, so we have less vacant homes sitting around causing property values in the areas to decline.

It seems that whatever candidate becomes our next president elect, we are still in for a long hard road. Both banks and homeowners will be bailed out but before that occurs, they are going to take serious financial hits. We may only be delaying the inevitable by holding off on foreclosures and if people get new loans to help them out, they will pay down the road, when they sell their homes.

If they realize equity when they sell the feds are going to want a piece of that action no doubt. I feel this bail out money is going to be spread around to those crying the loudest and hardest. Those that are working hard to keep their heads above water to make ends meet without knocking on foreclosure's door are going to be the ones that hold up this economy, but who will get the short end of the financial stick. In my humble opinion these people ARE the middle class, not the upper class, not the lower class or poverty level class.

Yours truly is the middle class, those who will do whatever they can to bring home the green so that they do not have to resort to asking for financial bail out money. These are the class of people that still believe in doing the right thing, by not letting others bail them out all the time.

Check out this article below, which in part I have summarized for you. It pretty much covers all you would want to know about how the future may look if either Obama or McCain are elected into office. But I am hoping you already have a handle on all of this by now and have made your decision, because today is D-Day!

Quite frankly what shakes out in the end will most likely NOT look anything like what either candidate has laid out for us over the past 2 years.

Which candidate's plan would best ease the mortgage crisis?

Bottom line is go out and VOTE for your candidate today, because if you don't, you have no right to complain about the one chosen. So be American, go VOTE and no matter which candidate is chosen, we all need to get behind him..Why? Because we are the UNITED States of America and we need to put the petty fighting behind us now and work toward cleaning up the messes we find ourselves in today. Thanks for letting me rant today!

Before you look any further what is your answer? Tell me if you got it right please!

Ok, here is the answer.....NO! (only 1 exception and I will discuss this a bit later)

There is a huge misconception out there that I need to correct. Many people believe that if the appraisal is done for refinance purposes that the appraised value can be and typically is higher than if you appraise the home due to a sale.

If any appraiser tells you that this is true....run far and run fast away from that appraiser!

Here is the bottom line, the MARKET determines value, not the reason for the appraisal. The only exception to this rule is if the client or lender wants what we call a "Fire Sale" value. In other words a value for the property with a shorter marketing period than what is typical for the area.

If your normal marketing time or days on market before the home sells is 120 days and the client wants to know the value of the home with a market time of 60 to 90 days, this affects the end result or value. We have to make an adjustment for marketing time being shortened and this typically lowers the value of the home.

Unless a fire sale value is requested, we should not care as appraisers if it is a sale, refinance, divorce, or estate tax deal. As long as the client has not dictated a marketing time shorter than is typical for the area, the reason is NOT a factor. And just so you know the client cannot dictate that you be conservative or generous on the value due to a divorce or estate tax appraisal, etc. They will certainly try to tell appraisers which way they want the appraisal to go, but this is undue influence and bottom line is these deals can wind up in court and the appraiser better be able to justify his or her numbers based solely upon facts, market conditions etc. and not on what the clients wishes were in this case.

This does bear repeating....the MARKET dictates value. We analyze market conditions, the list prices, the days on market, the seller concessions, listing to sales price ratios, the actual sales prices, etc. Then we reconcile all of these items among others and determine market value for the subject.

Market value for the subject is what we would expect to see on a sales contract. So if we appraise a home for $150,000 and you are considering selling the home, you would list the home above this price to take into account the typical list to sales price ratio for your area.

I hope I have clarified this matter for many.

Happy Halloween!

Mary Thompson, Certified Real Estate Appraiser

Here is the set up on this story. I would LOVE to hear what you think about this exchange between myself, this Realtor who is also the borrower, and the lender.

A Realtor who is purchasing a vacant RELOCATION home in our area has the home under contract for $370,000. The home is in above average to good condition. He thinks it is worth mid $500,000 range.

This Realtor is also the Owner of a large Real Estate Company, names will remain anonymous, though I would love to "out" this person. I am still thinking of sending these emails to the Appraisal and Realtor Boards.

So is it any wonder why we are in the mess we are in today with this thinking in today's market!!!

Realtor/Borrower's Email to the Lender:

Lou, once again I am baffled at an appraisal. It would be real easy to sit back and say that
it doesn't matter but you know I cant work that way. Although this appraisal wont burn me, I have
had 4 others in the last 45 days that have. I would like to ask that the sales price not be given to
the appraiser on any sales you process on our behalf. Since you don't have access to sale data, I have
listed some information below to see if you or Mary Thompson Appraisals can explain why certain comparables were used.

The subject home was in _____. There has been 5 sales in this neighborhood in the last six months. There has been 2 sales in the last three months. The average sales price for these sales was $540k. The lowest sale was $485k. Some of these homes have less square footage that the subject property
but the subject appraised at $450??

Here is the reason why.

The appraiser decided to go outside the community to another neighborhood?? She selected a community
were the average sales price was $421k. That's $120k less than __________? There lowest sale was $309k. That's $174k less than _________________

So why would anyone use a comp from the other community? My guess is that the appraiser new the sales
price and felt obligated to get closer to it. That should have nothing to do with determining value right? This is the same crap that got us into the housing mess we are in now (just reversed).

Thanks

My reply to lender who sent me the copy of this email from the borrower/Realtor:

As you are aware Lou, the sales contract must be given to the appraiser as it is required by USPAP (uniform standards of appraisal practice) for the appraiser to review all sales contracts, not because we are trying to get closer to the sales price or that the sales price should determine the value of the property (if that were the case, the appraised value would have been at or near $370,000, which of course it was not). We must review items like concessions paid by the seller, any special stipulations in the contract that we should be aware of, what kind of financing is involved, if HOA fees are involved. All of these items must be reviewed and noted in the appraisal report. We also want to make sure that the seller on record is the one noted as the seller on the contract, if not we need to know why, etc. etc.

As for the comps used. There were 2 on the same streetas the subject. These sales give us a pretty good idea for the value of the subject. The other homes that sold higher in ____________, in the $500,000 and $600,000 range, for the most part were newer, larger and had lake views. The overall sales price average of homes in ____________ may have been in the $540,000 range, but we want to use the most comparable properties to the subject as possible and 2 sales on the same street are as good as it gets in my opinion. One closed in June, 2008 and the other in February, 2008.

Listing History: This tells the true story. This HOME IS CURRENTLY LISTED FOR $379,900. THE HOME WAS LISTED FROM JULY 3, 2008 TO AUGUST 18, 2008 FOR $448,875 AND WITHDRAWN. IT WAS ALSO LISTED FOR 412 DAYS FROM 5/07 TO 6/30/08 FOR $464,900 AND OF COURSE DID NOT SELL FOR THAT PRICE. So it would not be reasonable to think that the home would appraise somewhere in the $500,000 range.

As for using a home outside the S/D. We usually try to see what other developments are doing in the area. Many times it is required or at least a prudent part of the process, to use at least one sale outside the S/d for comparison. Also this was a very recent sale, very similar in size to the subject, the same age as the subject and had a finished basement like the subject. The sales may have been lower in this development, but this very recent sale had an "adjusted sales price" basically the same as the other sales inside the subject development (very tight adjustment range). This tells me that there is no need for a location adjustment for this sale as the market is not recognizing this locational difference between the subject development and this one. Even if an adjustment was made, the overall value for the subject would not change as greater weight is placed upon the sales inside the subject development.

"This is the same crap that got us into the housing mess we are in now (just reversed)" With all due respect ____, if the situation was reversed and appraisers did not over value properties just to make the numbers work we would not be in the mess we are in today. We are in this mess partly because of the over-valuation of properties and now those properties are worth less today than they were at the time of the appraisal.

I hope this serves to clarify the development of this appraisal report. If you have any other issues or questions, do not hesitate to contact me.

Thank you,

Mary Thompson

Realtor/Borrower's Reply


Lou, I understand she must defend herself. I would too. However I am confused. Does the list price now determine
the value? Does a previous list price determine value? What part of the manual did she find that from? That is
just scary! As I have mentioned before, appraiser often make it up as they go!

As long as she is mentioning unusable facts, the home sold last year for $550.

As for the neighborhood adjustment. Should I have received a $120k adjustment for the home in the lower
priced community? I could have picked the whole appraisal apart but felt like picking the house outside the
neighborhood as a comp was enough.

Hell, the email below has more data inaccuracies that the appraisal itself.

For Future reference, _______ is taking this company off any approved vendor list
and I would ask that your hire someone else when doing a loan for us.
As the principle in this transaction I shouldn't have to pay for such work.

My Reply back to Lender only, the realtors reply did not dignify a response.

I cannot reply to Mr. _____ any longer, he clearly is looking for an inflated appraisal of his home and I am sorry but I cannot oblige him. We take our business seriously and we do not make things up as we go along. I surely hope you understand and agree.

Just 2 points I would like to make.

1.The past listing price does not determine value, however when a home has been on the market for over a year at $464,900 and has not sold, anyone can see that there is only one reason for this and that is the home was overpriced. As a Realtor, Mr. ____ should know this.

2. The home sold for $549,500 last year to the Corporate owner based upon a relocation appraisal, usually they have 2 appraisals for relocations. These appraisals occurred just before the market started its decline. Unfortunately the Corporation is now taking a huge loss on this home and for some reason Mr. Russell thinks it is worth what the Corporation paid for it last year.

Thank you, if you have any questions, please feel free to contact me.


Mary Thompson

Lender's Reply back to me.

Don't worry about it Mary....he is wrong and cannot accept the truth.

_______________________________________________________________________________________________

Well I am sure glad that someone sees this Realtor for who he is, just trying to scam the system, get more money out of the home than it is worth. He is perpetuating Fraud but totally ignores this because it does not suit his agenda or his plans.

So tell me what you think! Thank you.

I was just blogging on AR about zero comments and why some people seem to be featured over others and BINGO I write a blog about Appraising homes in a Declining Market Appraising in a Declining Market which is my business and I get featured. Thanks to all of you who reposted this blog and to those who subscribed to my blog and of course AR for featuring my blog.

Who knew that sticking to your line of work would get you featured. It seemed that there were so many other posts about everything but the real estate business, that I was beginning to wonder. So I have a new lease of life now....LOL .... I digress.

BIG THANKS GO TO ALL THOSE WHO COMMENTED AND WHO TAUGHT ME SOMETHING. YOU GUYS REALLY NEED AN APPRAISER ON YOUR SIDE TO GIVE YOU THE STRAIGHT SCOOP and I am very happy to be the one to help you out in this regard.

There were many questions about my post. I will continue to post other "insider appraiser" knowledge so that you know what to expect from this point forward. Since appraisals DO affect your business in a vital way you need to be kept up to date on how our business is changing and how it affects Realtors and Consumers. Big changes are on the forefront in 2009....Keep reading please, more good stuff in this post about changes.

Appraising in a Declining Market Just in case you missed it. Please review it as there were alot of good comments and questions.

What struck me was that there were so many of you that were surprised and/or did not know about some of the information that I brought up in my blog, so I wanted to repost MY replies in the hopes that more of you will see this and pass it along to others who may have missed it.

Darla: Correction in the market: is when people have to reduce and sell their homes at the price they were selling in the previous year. So even if they started out at say $150,000 and had to reduce the home to $120,000, but that same home was selling for $120,000 in the previous year, they just went thru a correction in the market, not a decline. Also it is considered Stable in this example. Hope that helps to clarify.

Roxanne: As for foreclosures the loans are usually for rehabbing of these homes and the lenders know the condition upfront. We do indicate what the condition is and any issues with these foreclosed homes in our reports, however, if it is an investment loan, where they plan to renovate and then resell, the lenders typically want a "Subject to (repairs) value rather than an AS-IS value and that is how they have been able to do these type of loans. Hope that answers your question.

Neal: Yes, in that situation an appraiser needs to make an adjustment for MARKET conditions, if they feel that the homes are declining that fast from contract to closing.

A couple of comments I would like to address: "Declining market appraisals becoming a self fulfilling prophecyin certain markets". Appraisals do not drive the values, the market drives us to determine values, so our process only reflects what is happening in the market, not the other way around

As for appraisers making the NUMBERS work....This is BAD, BAD, BAD, this is part of what got us in this mess to begin with, appraisers who just appraised to the sales price or estimated value amount and did not appraise based upon what the market would really bear for that property. So if you ever come across an appraiser who says, what number do you need to make it work....watch out! That is all I will say on that subject.

As for short sales, it really boils down to what the lender is asking of us on our opinion of value. We look at the terms of the loan in our appraisal process, but bottom line is if they want a true opinion of value as opposed to a "fire sale" value, this is what we will provide and advise them of the current market conditions in the process. If they want a fire sale value, then we adjust for this and that means the value is going to be lower as they want a value based upon a quick sale of the property.

I do think that banks are getting used to declining markets in their loan process, but usually at least here, you still have to have more money down or the loan to value ratio has to be lower in order to get a loan in a defined declining market.

Most of the counties in Georgia at one time were defined by the banks and powers that be as a declining market and some lenders were trying to force the issue with us to mark all of our appraisals in these counties as declining. There lies the problem, the banks telling the appraisers what to do as they have in the past with pushing us for values. How can an out of state bank know which areas are declining and which are not? As it turns out in our area, it can get as specific as neighborhoods that are declining and others that are not. So the appraiser must really know the area and review the sales and listing thoroughly to determine if they are dealing with a declining market

***If you have an appraiser coming from another part of town or different county to appraise a property, you need to make sure they are very familiar with that area and many times they are not, so the value could be flawed!

As for people getting appraisals BEFORE they make an offer, we see that more and more and I think it is an excellent idea to protect yourself. We are seeing buyers and sellers get appraisals before they list or purchase. Smart move!

Many of you may want to revisit my post on the new HVCC regulation (link below) they are working on that will come into effect in 2009, assuming it passes and it looks like it will in some form or another, which can impact your business and will impact the appraisal process greatly.

HVCC-will-affect-YOUR-business

As for buyers wanting appraisals ahead of time, well the HVCC will affect this. The lender will likely need a new report anyway as they will not be able to use one that a buyer brings to them any longer. As for buyers getting them just for their own purposes they can certainly continue do this. If it kills the deal, I am sorry, but the buyer is just being prudent and smart and protecting his potential investment in the property. When acting as a buyers agent, I would assume Realtors would want their buyers protected?

Eva: Sounds good to me. Laminate away (my post and give it to clients)

Joshua: Thanks! The market has always played a role or at least is should have! The market is what defines and determines the property values. Every thing we do is based upon market conditions. Underwriters continue to surprise me, some are by the book procedural fanatics and request things that clearly are not needed or do not apply in various markets and others could care less about the appraisal report, which is scary, but sometimes the underwriters are working in the production side of the bank and that should be outlawed!

On my next post I will include some of the data on the appraisal reports and how we address each section of the report when it comes to evaluating property and the adjustments we make for various items. Realtors always ask me what kind of adjustments I give for basements, pool, baths, garages, etc. TIP: The answer will not be the same across the board, but I will tell you why this is and it should help you in the future to determine how we make our all important adjustments.

Thanks again for all your very nice comments on my featured post and I am so glad to be of assitance to you now and in the future.