The Science of Valuation

Like a relic from the past, FHA loans have come back with a bang! FHA loans feature higher loan amounts (up to $729,500 in high-cost metropolitan areas), easier qualifying and lower down payments.

Great benefits of FHA loans:

• Down payment as low as 3%
• 100% gift allowed for down payment and closing costs
• Can pay revolving and installment loans to qualify
• Do not count 401K loans in debt ratios
• Non-occupant co-borrowers are OK (blended ratios)
• Easier qualifying criteria
• Full documentation only
• Property must be in good standing, no health & safety issues
• Borrower must have valid social security number
• Seller can pay all closing costs up to 6% of the purchase price

The following commentary was posted at http://weblogs.newsday.com/realestate/blog/2008/01/foreclosure_activity_in_new_yo.html

In response to this commentary, we add the following:

The commentary in this article is very factual, yet we seem to loose some perspective.  38,000 plus possible foreclosures may seem very high to many people.  It is actually larger than entire counties in New York State.  However, with over 3.3 million plus residential properties, not counting cooperative buildings, this level of foreclosures is not outrageous. As a matter of fact, total possible foreclosures are less than 1/2 of 1 percent.  Banks generally get concerned when the rate is above 1%. Compared to other states in the country this is very good.  Your article claims that New York is ranked 27th.  That is great news given the size of New York and the wealth of the properties. 

I would like to know one question, why is this being blown out of portion?  Do not interpret this comment as being insensitive to those who are possibly loosing their homes or who encountered fraudulent mortgage practices. 

What I am simply stating is: Real Estate values run in cycles, this cycle is no worse than the one in the late 1980’s early 90’s.  It appears that selling panic is better than selling fact.  Accuriz.com attempts to provide these facts and more.

http://realestatecafe.blogs.com/

Mortgage fraud is a reality.  A reality based on the fact that there are people in this world who try to take advantage of others.  We all know someone who has been affected and we all have our opinion of the results.  The single most important thing we can do to prevent mortgage fraud or any fraud for that matter, is to educate ourselves.  Ignorance is no excuse when it comes to the single greatest asset that we own. And greed is not the excuse to step up the ladder.  We all want a better life style, but at what expense. The link below is to a Blog that covers this every day.http://www.lawlib.state.ma.us/realestate.html

The following site is from the Massachusetts Law Library.  Great place to get started with legal issues.

http://www.lawlib.state.ma.us/realestate.html�

http://realtytimes.com/rtpages/20031020_insurance.htm

A good place to search for title issues:

http://realtytimes.com/rtpages/20010219_title.htm

Legal issues in real estate can apply to specific states and regions within a state.  Not all states have the same laws and an owner of real property needs to understand the differences.  If you do not have an attorney, a place to start with some basic questions is listed below.

http://realestate.findlaw.com/homeownership/home-buying/home-buying-deeds-faq.html

The valuation of real estate incompasses a broad set of issues.  Issues that can affect property values can range for minimal to significant.  Such an example could be the location of a property.  A property situated on a busy street may have a lower value than one on a quiet street, and a property located next to a toxic site could be significantly lower in value than one that is not.

When considering the valuation of a property, one needs to study the issues that affect value for that specific market.  A home without air conditioning may not be adversely impacted in a cooler climate, but could be adversely impacted in a warmer climate.

We will post weekly commentary on key valuation issues and visit our Weekly Tips to learn more about property valuation.

I have been in the appraisal business for over twenty years.  During this time there were many environmental and engineering issues that were discovered during a property inspection for an appraisal.  Issues that required another professional to review and comment on for me.

Most importantly, when I purchased our first home, then our second home there were structural issues that needed to be addressed.  Again, I contacted a qualified professional.

The single greatest purchase that most of us will make in our lifetime is a home.  Take the time to research issues and speak with a professional about environmental and home inspection issues.  Most importantly, ask questions, and a lot of them.  Never be intimidated and if someone does not want to answer the question, move on to someone esle.

An expense of $200 to $400 could potentially save you thousands of dollars.  Do not make the mistake I made thinking that my appraisal experience covered everything, it does not.  The leaking basement cost being over $4,000  because I did not find it prior to the purchase,  gave me no recourse.

The following site can get you started: 

http://tigerhomeinspection.com/faq1.html