Chris Sloan Tooele Real Estate

Tips for Getting a Fair Appraisal-President's message

Bob and Mary thought they'd found their dream home, especially when they made an offer and the seller accepted it. All the closing preparations appeared to be moving smoothly until the appraisal came back significantly lower than the price they'd offered to pay, thereby jeopardizing their chances of getting financing on that particular property.

The home appraisal is a vital part of both the home buying and mortgage refinance processes, because buyers and lenders need to be assured that the purchase price or loan amount is in line with the home's market value. This helps prevent the buyer from overpaying and protects the lender from loss in case the home goes into foreclosure. However, during the housing boom years, there were reports that appraisers were being unduly influenced to appraise homes for higher than they were worth.

That's why mortgage giants Fannie Mae and Freddie Mac agreed to adopt a Home Valuation Code of Conduct that aimed to create independence in the appraisal process. However, it appears the code has created unintended consequences as well, such as unusually low valuations. In fact, some reports suggest that there has been a greater use of unqualified appraisers since the code was implemented.

Just as an inflated appraisal causes problems, so do lower-than-market valuations. Buyers are unable to get financing for the home they'd like to buy and homeowners are prevented from refinancing their mortgages. Nevertheless, even though Bob and Mary's situation has become more common with the new regulations, there are still things buyers and sellers can do to ensure they get a fair appraisal.

First, make sure the appraiser who is assigned to appraise the home is experienced in appraising similar homes in the area. There have been reports that some appraisers are conducting appraisals outside their geographic areas of expertise, so make sure to do a little background research before the appraisal is conducted.

Second, the homeowner should make sure the home is clean and presentable. The appearance of the house could have some influence on the final number, so prepare the home the same way you would for an open house, suggested Michael H. Evans, of the American Society of Appraisers, in a recent Money Magazine article.

Third, the homeowner should make sure to be available during the appraisal. Prepare a list of the house's attributes that may not be readily apparent to the appraiser. For example, a home sound system or energy-efficient upgrades could add value to the home, but might not be readily noticeable to the appraiser.

Fourth, if the appraisal comes back lower than you expected, carefully review the report. Have your Realtor help you determine if the data used in the report was the best available. Perhaps your Realtor knows of other recently sold comparable homes that might be a closer match to your home. Also be on the lookout for any potential errors. Is the square footage accurate? Is there any part of the analysis that doesn't add up? If you find errors or have additional information, present it to the appraiser. Many appraisers will appreciate and consider the extra information.

Finally, if you believe there are problems with the appraisal, that your appraiser is not addressing, talk to your lender. Or you can report the problems to the Utah Division of Real Estate, which regulates appraisers in Utah.

Determining market value is a difficult task in today's market, so it's a wise idea to provide the appraiser with any information you have that might be helpful. Your Realtor also has unparalleled knowledge of local housing markets and is likely to be a valuable resource as you navigate today's new appraisal landscape.

Published Monday, September 28, 2009 12:19 PM by Chris & Berna Sloan

Want A Loan For A Fixer Upper?-Try FHA !

Corie Seymour's blog on getting a loan for a fixer upper that allows the home buyer to include the cost of the improvements to the FHA loan was an eye opener.

The loan has always been available, but was so difficult for the buyer to package that we had almost forgotten about it.

Now if you keep the home improvements under $31,000 it's a piece of cake.

At least that's the way that Doug Walker explained it in Cories blog.

Not only have we sold some Tooele homes that would have been perfect for this type of mortgage, we could have put together some transactions that we couldn't make work before.

Listen to some of what Doug had to say.

Cheap Fixer Upper Financing

In this age of stimulus bills and bail outs you would expect a really cool mortgage loan program to help home buyers. Well, there is one, but it's actually been around for years. There is a little known FHA loan program called the 203(k) that allows you to purchase a home and fix it up with the same loan. It's not very well known because most lenders either can't do them or just don't want to do them. They are more work than the average loan officer wants to do and most companies don't have underwriters that are familiar enough with them to confidently issue an approval that FHA will accept. At Republic Mortgage we feel the benefit to the client is so big that we have made the commitment to offer this program. We have loan officers who have been certified on this program (of course, that includes me) and the staff to get them done.

To read the entire article click . FHA Loan.

If you don't have a fixer upper in mind, but would like to search for one in Tooele, Grantsville, or Stansbury Park stop by our website @ Tooele Homes For Sale. You can search for hundreds of homes or Condos listed in Tooele County and receive photos, prices, maps, directions and tips on buying or sellig a home.

Or you can call us @ 435-840-5029. We'll talk to you about Tooele Real Estate or just about getting an FHA loan for your fixer upper.

The state of Utah real estate : Home Sales looking Up.

As we celebrated New Year's Day 2009, many of us were relieved that we were leaving behind a dismal 2008.

Even so, we had wished we were closer to 2010 and the hopes of a better economic outlook.

Well, we're halfway there and despite the challenges still ahead, it feels like we're in a much better place than we were last year or even six months ago.

For Utah Real Estate, in particular, the outlook definitely feels rosier. In fact, some experts are saying the toughest times may already be behind us. A new report, titled "Utah's Homebuilding Industry: Present Perspective, Future Prospects," suggests the rate of the Utah home building industry's decline has been slowing of late, the Salt Lake Tribune wrote.

The report's author, James Wood, director of the University of Utah's Bureau of Economic and Business Research, said the diminished weakness could signal that Utah is closer to reaching a bottom for this real estate cycle. One encouraging sign is the recent increase in June home sales in Utah. For the first time since September 2008, monthly home sales in the four Wasatch Front counties and Tooele were higher than sales in the same month a year earlier. Preliminary numbers show the increase at about 7 percent, but the rise is likely to be higher because sales for the month are still being reported.

Statewide numbers also show signs that the biggest declines are likely behind us. At the beginning of the credit crunch in September 2007, Utah home sales saw a drop-off of 25 percent. From there, the most significant drop was in first quarter 2008 when sales were down about 35 percent from levels the year before. Since then, however, the rate of decline has slowed, and the upcoming second quarter report is expected to show even more improvement.

Other positive news comes on a national level, where seasonally adjusted existing home sales have increased three times this year, a sign U.S. home sales may have already hit a bottom. Most recently, seasonally adjusted U.S. existing home sales increased 2.4 percent in May, the first back-to-back monthly gain since September 2005.

California has also seen increases in the median price of existing single-family homes for three straight months, good news since California is seen as a barometer for the rest of the country. Of course, prolonged improvement in Utah's housing sector will depend on how the national economy continues to perform.

The National Association of Realtors is forecasting for the rest of the year that the U.S. economy will begin recovering as stimulus programs start to take effect, credit and banking problems stabilize, and the manufacturing sector improves. NAR expects Utah will follow a similar pattern because the state has been less impacted by the recession. In a recent report, the organization said Utah and its housing markets should participate in a modest housing recovery through the later part of 2009, with somewhat greater potential in 2010. That's not to say there won't be challenges ahead. Prices still need to stabilize and a continued rise in foreclosures could put more real estate inventory on the market.

Another concern is the fact that job growth is not expected to resume until the later part of next year. But in many ways, Utah is still faring better than many states. Our foreclosure rate is less than the national rate, at 2.36 percent compared to 3.85 percent. Salt Lake City had lower exposure to subprime and Alt-A loans, with a share of 14 percent versus 15.5 percent nationally. And Utah's unemployment rate is only 5.4 percent compared to 9.4 percent for the U.S. Most importantly, Utah buyers are beginning to recognize that now is an ideal time to be shopping for a home.

With the affordable prices, super-low interest rates and government incentives, more people are once again getting excited about purchasing real estate. And that's the first step to any recovery.

Tips for buying a short sale: part 2

President's Message

Chris Sloan

Earlier this year, I wrote about real estate short sales and included several tips for buyers interested in purchasing these properties. Since that time, short sales have continued to play a significant role in the marketplace, with one in six Wasatch Front homes listed for sale being classified as a short sale.

Because buyers continually ask me about short sales and what it takes to successfully buy one, today's column will include another set of tips to help you have the best chance for success. Let's start with the basics:

A short sale occurs when a bank allows a homeowner to sell his property even though the sales price of the home will be less than the amount owed on the mortgage. This situation typically occurs when property values have fallen and a homeowner must sell the home, usually because of financial difficulties. The short sale prevents the property from going into foreclosure, which can save the bank money and can leave a less severe mark on the seller's credit report.

For buyers, short sales present an opportunity to purchase real estate at very competitive prices. While short sales may not be bargain-basement deals because the bank is trying to minimize its losses, the properties are generally priced to sell. In fact, some properties are generating so much buzz that multiple buyers are competing to purchase them.

Because there is so much interest in short sales these days, it's important that you submit your best offer if you are serious about buying a particular home. In general, only one offer at a time will make it to the bank for approval, so you want the seller to accept yours if you are in love with the home.

When making an offer, you want the price to be close to the fair market value of the property. If you submit an offer with an asking price that is significantly below market value, it is less likely the seller will accept your offer and it is unlikely the bank will approve your price. Save time beforehand by asking your Realtor to help you determine a fair price for the home. That way you won't be waiting for months only to have the bank tell you the price is too low.

You will also increase your chances of having your offer accepted if you don't include any contingencies, such as making the offer dependent on whether you can sell your existing home. Buyers who have their financing in order also have a better chance of having their offers accepted. If you are pre-approved for a mortgage, have a large down payment and are ready to close at any time, your offer may have a better chance than one from a less-qualified buyer.

Once the seller accepts your offer and sends it to the bank for approval, be prepared to wait. At a minimum, banks are taking up to three months before approving an offer on a short sale transaction, and in some cases, the wait is six months. The bank may also make changes to your original contract, which may require additional negotiations.

You can also get a feel for how many delays to expect if you've had a title company conduct a preliminary title search. If there are numerous liens on the property (e.g., a second mortgage, a home equity line of credit, homeowner's association dues, mechanic's liens, etc.), it is more likely there will be hiccups because each entity has to sign off on the deal.

Finally, once you do get approval from the bank, you'll want to be prepared to close in as little as 30 days because some banks are adding additional fees if buyers don't meet their deadlines. Prevent potential problems by working with a lender who can close under a tight deadline. Also make sure your home inspector can complete an inspection on short notice.

Although short sales are complex transactions, they provide many opportunities for today's home buyers. For the best chance of success, make sure you are working with a Realtor who has experience representing buyers in short sale transactions.

Published Monday, July 13, 2009 1:59 PM by Chris & Berna Sloan

A couple of weeks ago I posted this rent to own article on the Weekly Salt Lake Tribune offering for our Utah folks.

We had a ton of comments, as both Utah home buyers and home sellers saw a possible way out of a variety of Real Estate dilemas.

I encourage everyone to examine Rent to Own, and lease options as a strategy to weather the Real Estate storm.

I also encourage everyone to seek adaquate legal opinion as to whether it is a legal strategy in your case and how to best protect your interest.

I hope this gives you some good ideas.

Rent-to-own agreements expand real estate purchase options

President's Message

Chris Sloan

With larger down payments and higher credit scores required to obtain mortgage financing in today's post-subprime era, an increasingly popular rent-to-own agreement may be the solution for cash-strapped buyers looking to take advantage of today's competitively priced real estate.

Called a lease option, the arrangement is where a buyer agrees to rent a property and then purchase it at a later date. The agreement is a cross between a typical purchase contract and a lease, and is essentially like having a purchase contract with a delayed closing.

In these deals, a buyer will typically agree to pay an upfront fee for the "option" of purchasing the property at a later date for an agreed-upon price. In other words, the buyer is simply buying the option to purchase the property itself at a later date. This fee will eventually go toward the buyer's down payment if he or she decides to go through with the purchase; the money will be non-refundable if the buyer decides to back out of the deal.

The contract will also stipulate a monthly rent payment, often with a portion of the rent going toward the buyer's future down payment. During the rental term, often one to three years, the buyer will have time to save money for a down payment as well as work on improving his or her credit score. For example, if a buyer paid $5,000 for the option to buy a $200,000 home and $400 of the $1,400 rent payment went to the purchase, the buyer will have saved $9,800 after one year and $19,400 after three, according to a CNN Money article.

Along with the opportunity to save money and improve their credit scores, buyers also have the major advantage of getting to know the neighborhood and the area before actually purchasing the property. If a buyer discovered he hated the neighborhood after a few months, he could decide at the end of the lease term not to buy the property, losing only his upfront payment and the portion of the rent payment that would have gone toward the purchase.

Lease options are ideal for homeowners who have purchased another home and are having difficulty selling their first home. The lease option allows them to receive monthly cash that can help offset mortgage costs, and they know the tenants are more likely to take better care of the property because they have a stake in it.

Nevertheless, because a lease-option transaction can be more complicated than others, it's important for both buyers and sellers to work with an experienced Realtor and understand the risks of this type of agreement.

Buyers should take several steps to make sure they are happy with the property and are working with a credible seller. Before the contract is finalized and the upfront option money becomes non-refundable, buyers should conduct a thorough inspection of the property to find out about any potential problems, like a leaky foundation or a damaged roof. Buyers will also want to get a title report to make sure there aren't any problems that could prevent the homeowner from selling the property at the end of the lease period. Excessive liens on the property could be one red flag. Buyers should also look for any signs that the property is headed toward foreclosure.

Risk reduction steps for the homeowner include making sure the agreement requires the tenant to provide notification of his or her intention to purchase the property 30 to 60 days before the lease expires. This is because the seller always risks that the buyer will decide not to purchase the property. If the seller knows the tenant is not going to exercise his or her option to purchase, the seller can begin marketing the property before the lease expires.

Most importantly, both buyers and sellers should make sure they work with professionals and understand the terms and agreements of their contracts. A real estate attorney can help you avoid any legal pitfalls, and a Realtor will help you negotiate the purchase of the property. To learn more about Utah real estate and to find a Realtor, visit UtahRealtors.com.

Published Monday, July 06, 2009 3:06 PM by Chris & Berna Sloan