Richard D Ferris Florida State Certified (FHA) Appraiser

A recent article from the Florida Realtor's Association, noted that Florida's consumer confidence was on the rise.

It is interesting that at the same time in the market, I am noting trends as of the 3rd quarter 2009, showing recovery of price/sf and in many cases - increase over the prior quarters:

You can see from the above market analysis - the overall 2009 market still has an average decline of 1.52% per month. However, the 3rd quarter is showing promise! And this is a trend I am seeing in nearly all of my appraisals over the month of August.

Additionally, the affordability of homes appears to be very healthy right now for buyers. Avergage price/sf in the qurrent quarter is still at or below that of 2004! So it looks like a good time to be a buyer!

Time will tell if the trends in the market truly bounce back. You can see in the 2nd and 3rd quarter above - the market shows some signs of stability among the average price/sf. However, the trend is still going down for both list price and sold price.

Another highlight though - is that Days on Market also appears to be leveling out now - somewhere around 90-180 days here in Central Florida! So buyers are getting active again! And of course, the volume of sales in 2009 has FAR surpassed that of 2008! Which means people are actually BUYING again!

Now, if only Florida could get that unemployment rate UNDER 10%....we'd be seeing even more health in today's market!

Well SunShine State......here's to better days ahead at least!

I am keeping an eye on the wildfire still burning near SR 50 and CR 561 in Clermont today.

My home and office (in my home) is loctaed just a few miles south of this wild fire. I took a drive along CR 561 this morning while the road was still open, and captured some recent pictures of the burned over area.

I am truly grateful for the firefighters and forestry division for all their hard work over the last couple of days! So far, no homes have been destroyed or damaged - although some surrounding lands are charred. It all grows back eventually - but it certainly makes one grateful for the blessing of a safe home and famlily.

I extend my heartfelt thanks to our public servants for their hard work keeping homes and families like mine safe!

Make it a SAFE day...

I read a news story from MSNBC indicating the reality now setting in on many sellers in the market. You can read the story at http://www.msnbc.msn.com/id/27648884?GT1=43001

One statement was made by a Florida seller, "We lost close to $100,000 in equity so we were walking away from real money."

First - is it "real money" or "not yet realized" money. For homeowners who purchased a home in 1st quarter 2007, their actual value vs their purchase price is likely MUCH lower in the present market. THEY have lost REAL money.

But if you bought a home in 2003, and gained $150,000 of equity from 2003 through 2006 - and are now back to 2003 levels - their only real loss is potential, or loss of equity. Or, perhaps the real loss is when you compare your home investment to the lost opportunity of putting your money in other venues such as mutual funds.

I am noticing a continued trend, however, of the WIDE GAP of hopeful sellers with the narrow expectations of buyers in today's market. One trend was in a community in south Poinciana, FL. This is actually in the Polk county section of Poinciana.

I noticed the median sales price vs the average sales price. But then, I started to compare, as I always do in my appraisal reports, the difference in sales price vs listing price. Typical observations...3-4% difference.

But then I looked also at the ORIGINAL list price vs the sales price. WOW. This is where sellers have to face some reality and quick - if they want to move their homes!

You see the trend? Homes were initially listed 17-23% above the sales price. This area has been hammered hard by foreclosures, short sales, etc. So buyers in this market are really looking for a deal. And when a seller is now competing against bank inventory - the markets are not forgiving. The numbers show that buyers can get pretty decent homes (maybe some carpeting and painting needed) - for in some cases 1/2 of the competing listings!

I found this quote from the article very interesting:

"A recent Coldwell Banker report showed that more than three-quarters of its real estate agents surveyed said most sellers have unrealistic initial listing prices for their homes."

Help me understand this Realtors....why would you list a home if you clearly believe the price if too high? I know you WANT the listing. Are you betting you can wear down the seller and convince some future price reductions? Does this lend itself to sellers who are digging their heels in just thinking that you - the Realtor - are not doing your job?

Maybe this is where some additional help can come in handy. I know most people think of using an appraiser only at the END of the transaction...when the bank REQUIRES one. But why not at the beginning? What is the view of an appraiser in today's market? Are we too mired in "over inflated appraisal" stories? Have Realtors just been exposed to too many low quality appraisers who only seem to know how to fill out forms and "hit the sales price", etc?

What if you could enlist a qualified, professional appraiser to help you convince that seller of their unrealistic expectations? Would that be worth $300-$400? What if you could have a quality appraiser provide you with a pre-listing appraisal, measure the home, get you a floor plan, true measurements, market analysis, and specifically...what the seller can expect in declining market conditions?

I know in my reports, I break down market declines into a daily figure. So your seller could see they may be losing 0.0025% each DAY they wait in the market.

I know you don't want to spend $300-$400 out of YOUR pocket...but how much money are you wasting with trips to meet the seller, renegotiate the listing price, time spent discussing reductions, etc? Perhaps $300 out of the gate may get quickly repaid with less hassle from the seller and also a quicker closing?

Perhaps once that seller learns you went out on the limb to employ a "team approach" and hires a quality, certified real estate appraiser - that one listing could turn into multiple referrals? All for the cost of a QUALITY real estate appraisal.

And I keep harping on QUALITY here, since you don't just want someone who has been licensed for 2 years. You want someone who WANTS to tell you and the seller the TRUTH. Someone who can break down market statistics, decline rates, neighborhood trends - and formulate that into a very simple to understand report that your seller will grasp.

I hope you will consider employing an appraiser in a pre-listing scenario. But be sure you ask them some specific questions.

1. How long have you been licensed?
2. What methods do you employ to "break down" the market?
3. Do you use graphs, charts, or regression analysis tools?
4. What sources of data do you use (assessor only? MLS and assessor, other online tools?)
5. Are you a member of any educational groups (Appraisal Institute, NAIFA, FREA?) to demonstrate your commitment to eduction and advancing your skills?
6. And lastly - can you send me any samples of your work so I can know they kind of appraiser I may be working with?

In today's markets - there are plenty of appraisers all looking for new sources of work. That is good and bad for you. Good because appraisers may be more willing to let you "interview" them. Bad - because you, the REALTOR need to do more research into knowing what makes an "average" appraiser and what makes a "QUALITY" appraiser.

I hope this gets you thinking. And...I hope it helps you discuss the "gap" with your sellers so you make the most of YOUR time and theirs in the market!

Make it a productive day

I have found recently that many neighborhoods in the Central Florida housing market, show significant differences between what a seller's expectations are and what is reality from the buyer. One example of this, is in a community south of Clermont, FL known as Westchester.

There are presently 15 active listings in the Westchester community ranging in size from 1,176 sf to 2,200+ sf. Listing prices are from $109,900 to $249,000. In the last 12 months, the MLS reports 7 closed sales from $150,000 to $209,000 for homes of similar size range. There are currently many short sale and REO/Bank owned properties noted in the community. The adjacent community, Greater Groves, is additional competition in the market. This community has had 12 sales in the last 12 months from $110,000 to $250,000 for homes of similar size and age. Active listings in this community range from $117,900 to $279,000 with 22 active listings.

Total between the communities at present are 37 active listings with 19 closed in the last year. This is considered an over supply of available inventory based on absorption rates.

The market is considered to be declining at present. The following is a view of the 10 year trend history for the subject's market area. This includes all sales of single family homes regardless of age and size. This represents the average sold price/sf and the average days on market (DOM) for the area:

See graph below:

As noted, the trend in average sold price/sf rose dramatically from 2002 through 2006 with the peak being in 4th quarter 2005. The trend since 2006 has declined with market corrections and has dropped in 2007 due to many short sales and bank owned sales in the market. Likewise, the average days on market has escalated since 2006.

The following is a view of the average market indicators in the last 12 months:

The average list price vs sales price is 6.80%. Median is 9.31%. The reconciled LP vs SP is 8.00%. This represents the difference between the seller's last listing price and the final sales price. However, the average listing is typically 10% over priced as noted from the variances between original listing price and sales prices in the area.

This indicates that the seller's perspective is typically higher than the market. This also indicates why the average DOM is 133 days. Many listings show reductions after 90 days and continued reductions until the market median are met. Typically, from the last reduction to contract is within 30 days once the price reaches levels where buyers are acting. This indicates that aggressive pricing in the market is key to selling homes under 180 days.

Further evidence of the trends of over pricing in the market are shows in the graph below:

The general trend between original list price, final list price and sales price in the last 3 years in the market. Certainly, the perspective of a buyer in this market since the decline....is MUCH different than the seller's.

For a FREE PDF copy of this report, please click HERE.

Make it a productive day

I recently completed an inspection for an appraisal of a home in my county. The home was a typical block ranch with needed updates to the flooring, painting, etc. But the home itself was pretty typical of the area.

The neighbor's home had a fence around it and all seemed just fine to me at the inspection. All the homes had similar appeal to the area, etc.

Then I pulled the satellite maps from the county assessor's office:

So do you think this would have any impact on the value of YOUR home if you lived next door? The amazing thing is, you cannot see any of this from the street. All of these vehicles (if they are still there) are behind a very high fence. But, as confirmed from both the county's maps and www.maps.live.com - this is the way the neighbor's yard looks in the back of that home.

Now I do not have any data to suggest that this has a known impact on a buyer's perception for the adjacent home. But sure enough, this would be a BIG concern to the lender making the loan for purchase - should there be some environmental impact.

Can you say leaking gasoline into nearby septic tanks? Luckily the area has county water services so no wells exist for drinking water.

So if you plan to buy a new home in a densely populated neighborhood - pull some satellite images or go visiting before you take out that new purchase loan! It could save you some disputes in the future!

Just another reason to be sure your appraiser is using current technology tools!

Make it a productive day