New Appraisal Rules are now in effect!

New Appraisal Rules are now in effect!

Just when you thought Real Estate in Loudoun and Fairfax County could not get any freakier. Well, the new appraiser rules are now in effect! So, what does this mean for you! Well, if you are thinking of buying or selling a home in Loudoun, Fairfax, Alexandra or anywhere in-between you will be affected.

Here are the highlights of the new appraisal guidelines (also some tips and pit falls);

• The days of the lender directly calling the appraiser to look at a house are gone! Lenders now must use an outside firm who is not directly associated with the lender to complete the appraisal. The outside firm must rotate each appraiser. So what you say! Well, overnight a new industry has sprung up that caters to banks needing to comply with these regulations. These companies (more like clearing houses) bundle appraisals and bid them out to the highest bidder. This explains why some local Realtors are seeing appraisers as far away as Virginia Beach Va! Try explaining the difference between Brambleton and Ashburn or Evergreen Meadows and Woodlea Manor to someone who’s never set foot in Loudoun or Fairfax County! The larger lenders have 1,000’s of appraisers in their database that they are rotating.
• All appraisers must use at least two closed transactions within 90 days and two active listings in their appraisers report. Most professional local appraisers will use only traditional sales (no distressed properties) when appraising a normal sale however, we have seen out of area (sometimes out of state) appraisers uses the lowest three listings in any given area.
• Spot checks and field reviews, just because that first appraiser said you where okay doesn’t mean you are out of the woods yet. Lenders will now double check appraiser. This can be done by a “desktop appraisal”(basically looking up data on a computer vs. visiting the house) or by sending out another appraiser.
• There is an appeal process if you do not like the outcome. Each lender is a little different.
• Appraisers now have to report the condition of the overall market with the appraisal. The appraiser will determine if an area has an over supply or is in decline. The following areas are places that have an oversupply of homes for sale (this is according to our guest appraiser):
o West of Leesburg
o Purcellville
o Great Falls
o Manassas
o Oakton
There are many sub-neighborhoods in these areas that are doing very well. The real rub has been when Realtors listing Short Sales and foreclosures much lower then market price (I’ve seen some agents list houses as much as 50% below market value) in order to get multiple offers and start bidding war. Appraisers have to use a couple of active listings to determine if the neighborhood is in decline or incline. This low-ball strategy is killing neighborhood prices!!!!

• Just about everything inside the Beltway is in good shape. Also, just about all homes under $400,000($250,00 for townhouses) seem to be selling well and do no fall into the oversupply category. Conversely, homes in the upper brackets ($700,000 and up) are having amazing challenges. As always Real Estate is local and you should consult a Real Estate professional for an individual evaluation of your home (please send all hate mail to George” we don’t need no stinking regulations” Bush”).
• If you are using an FHA loan the appraisal will stick to the house for 6 months. No need to shop lenders if the first appraisal did not come in at price.
• Here are some helpful hints for all those who want to know how much credit you get for upgrades (these are all estimates please no hate mail;0):
o Extra full bath $2,500-$5,000
o Decks $5,000
o Walkup or Walkout basements $5,000-$10,000
o Price adjustments for sq footage (bump outs etc) $40-$75 per sq foot
o Finished Basement $10,000-$20,000
o Maximum price adjustments cannot exceed 25% of sales price!

So, you want to sell your house in Ashburn, Brambleton and or Leesburg and all this info just gave you major stomach pains. Well, I’m here to help.

• First things first, HIRE A FULL TIME PROFESSIONAL REALTOR WHO UNDERSTANDS YOUR AREA. This just huge. I see agents who are not familiar with the area list so many houses and I’m just left scratching my head (banks do this too!)! It is just as bad when you use a buyer’s agent that doesn’t know the area they are selling. I see so many crazy offers on houses that I know the buyer’s agent has no idea the true value of the home! If you are thinking of buying or selling in Ashburn, Brambleton, Leesburg, Lansdowne and Purcellville make sure your agent can tell you what it was like when route 7 was two lanes and the only thing that slowed you down were deer, cows and cops!
• Consider getting an appraisal done in advance. These can be done as cheaply as $200. Most competent agents can do a CMA (not an Appraisal) for free. This should give you a good idea of what houses are selling for.
• Always give yourself at least 30-45 days to close. The appraisal can take up to two weeks to get done!
• Think about using a local bank. It is much easier to challenge an appraisal when the bank manager is in your neighborhood vs. one on the other side of the world! I like Middleburg Bank and Sandy spring. They both do very good work! Email me and I’ll send you the contact info for the Loan officers I like to use.

Read more on my BLOG.

Take care!
Chuck

Certified Distressed Property Expert Part 3

Have you ever taken a class and realized half way through the class that you have been doing what you are learning about all wrong? I now think that all the short sales I closed in past were pure luck! And the ones I didn’t close were because me and the other agent were fumbling around in the dark expecting the other to know more. UGH! Although I can’t correct the past I sure make up for it now that I have the knowledge of being a Certified Distressed Property Expert--- CDPE! Today’s course was packed full for information to help homeowners!

One of the big topics that were covered was option for homeowners. This covered all the different options homeowners have before they go into foreclosures. I see my job as helping homeowners find the best possible solution. This does not always mean a Short Sale. So here they are;

• Forbearance or repayment plan
• Rent Property
• Mortgage Modification
• Short Sale refi (this is a great new program to help home owners refi there home at market value!)
• Deed-in-Lieu of Foreclosure (great way to save your credit)
• Service Members Civil Relief Act (SCRA) there are also programs for police officers and firefighters!
• Lastly, Short Sale!

* We covered the finer points of qualifying a person a short sale. Not everyone who applies for a short will be granted permission from the lender to do a Short Sale.

* Lender Math. This was an insightful look at what lenders are looking for in an offer.

* Back up offers. This was the most eye popping of all discussions. It covered the process for accepting multiple offers and how to work with other Realtors and the bank.

* Closing deals that have a first and second trust. I have always avoided deals where there is a first and second trust because I always thought that they would be too hard to close. After all, it’s hard enough with one bank but working with two???? Now I realize that not also are they not impossible to close but in some cases they are the easiest deals to close! Talk about ignorance costing you money! I turned down dozens of these types of deals last year!

* Negotiating with PMI companies.

* And finally the difference between Short Sale consequences and Foreclosure consequences.

Just another information filled day. I can not wait for the next class!

See you then!

Chuck

Certified Distressed Property Expert Part 2

Today the CDPE course focused on the similarities between the 1980’s S & L crisis and our current housing mess. We also starting going into the nuts and bolts of how to really start helping homeowner who are in distress. This included learning about organizations like Hope Now and others that help homeowner negotiate with lenders. Here are a couple brief points that stood out in today’s class

• Over 50% of loans that are modified go back into foreclosure in a year.
• Most Americans only have a 9% to 12% monthly monetary cushion to live on. That’s less then $400 a month for most families!
• 274 lenders have gone out of business since the credit crisis first hit.
• We reviewed the differences between a foreclosure and a short sale on homeowners credit as well as the long-term impact on people lives. We actually received a detailed breakdown of the differences (email me if you want a copy!)
• Finally, we started taking about pricing strategy and reviewing some bank forms. This will make up the majority of the next three sessions.

This is really turning out to be a must have class for any Realtors who is planning on working with distressed homeowners. Although I’ve successfully closed many short sales over the last couple of years this course is really demulsifying a lot of the misconceived information that is out in the market place.

See you in a few days!

Chuck

Certified Distressed Property Expert --- CDPE Short Sale Expert

Certified Distressed Property Expert --- CDPE

Recently I’ve been hearing about a new Realtor designation that many Realtor professionals have recommend as a must have in today’s market. The designation called Certified Distressed Property Expert or CDPE is an in-depth course on identifying and helping homeowners who are in trouble with their mortgages. The course covers the many strategies needed to help homeowners before a bank forecloses on their home and damages homeowners credit and lives. There were several very big points that I took from yesterday’s first class;

1. 7 out of 10 homeowners go into foreclosures without visible intervention!
2. There are 6,759,049 distressed homeowners in the US.
3. Subprime mortgages amounted to over 20% of all loans in most regions. Richmond Va is one of the top city’s nationwide with over 23% of all loans being subprime.
4. The majority of subprime loans will begin to reset in the next 2 to 4 years. That’s right you read that correctly. There could be another spike in foreclosures unless Realtors start helping homeowners now!

So far this has been an eye opening first day. This course covers not just the nuts and bolts on how to work with a lender on a homeowner’s behalf but also the emotional side of home loss. As a Realtor working in the ever booming Ashburn/Leesburg, Northern Va areas I have worked with many very good hard working families who have lost their home to foreclosure because no one was able to help them. I have listed many homes for sale as short sales and have even put offers to buy on many others and have found the experience frustrating and confusing. So far this course seems to be addressing a lot of my unanswered questions as to why there is so much inconsistencies within the different lenders and banks.

Stay tuned for more updates to come!!!

Chuck