Gilbert Real Estate Blog
~ by Randy Hooker of Dreamcatcher Realty
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What is my house worth in today’s market?
I hear or receive this question no less than 2-3 times per month. On the surface, it would seem to be a rather innocent, simple question. However, on deeper analysis it becomes infinitely more complex and convoluted than most folks imagine. I’ve decided to tackle this question – “What’s my house worth?” – and give you my personal and professional response to it:
Dear Homeowner,
I don’t mean to sound flippant, but what your house is ‘worth‘ depends on the opinion of the specific person evaluating your property. An appraisal is an opinion of one person, a licensed appraiser. A BPO (Broker Price Opinion) or CMA (Comparative Market Analysis) is an opinion of one real estate agent or broker. An offer submitted by a prospective buyer is yet another opinion of one person.
How many opinions of value might there be? >>> As many as there are people on the planet!
Here’s a reality check for you homeowners: Valuing a property is an art, not a science, and the folks who are best at this art are those who consider ALL of the factors relative to any given property. Here’s a short list of the 5 biggest factors to consider:
- Recent ‘comps’ (comparable sales) within the past 3-6 months that are reasonably similar to your property
- Major improvements, options or upgrades (or lack thereof), e.g., private pool, granite counter-tops, new roof, new AC, etc.
- Age of the home and surrounding neighborhood/subdivision
- Location of your property
- Curb appeal of your property
Beyond these, there are an infinite number of other factors and variables that can weigh on the perception of any given person. You simply cannot rely on the tax assessor’s valuation, Zillow’s Zestimate, or any of your friends, family or neighbors. You need the advice and counsel of an objective, third party professional who can give you an experienced, knowledgeable opinion. And even then, there is not one finite number that can possibly represent the TRUE value of your home – but a projected sales price range can be estimated by the right professional.
The best advice I can give you is to contact a local, experienced real estate agent or broker with whom you feel good, and that you trust. S/he should be able and willing to do the appropriate research and then counsel you regarding your options and objectives – and ultimately, the best strategy for YOU. Make sense?
Fun Friday: A Day in the Life of a REALTOR
As insane as this parody is, there is a tremendous amount of every day reality in it. My thanks to a new friend for bringing it to my attention. Enjoy!
If after viewing this video you are still interested in buying a home in Gilbert, then click on Gilbert Real Estate to search all homes for sale in Gilbert.
Greater Phoenix Real Estate ~ May 2010 vs. May 2009
Courtesy of the Arizona Regional MLS, the below two charts offer up a quick overview of the current market conditions in the Valley of the Sun. Whether you’re into comparing consecutive month over month stats (like May 2010 vs. April 2010), or year over year (like May 2010 vs. May 2009), the charts are provided to help us grasp the overall picture.
Greater Phoenix Market Conditions
Greater Phoenix Market Conditions
I’m always extremely cautious about using real estate “averages”, as they can and do often skew the true picture of individual communities and areas. Nevertheless, there are a couple of points that are worth noting in the above charts.
It’s interesting that normally at this time of year we experience an increase in listings – and yet the past 2 months has seen a decrease in listings. Anybody care to speculate on the reason(s) for this anomaly?
The next observation is that the greater Phoenix market is holding fairly steadily in the number of Active listings as well as sales.
Additionally, at roughly 4.5 months inventory, the greater Phoenix market appears to be showing some consistent stabilization. As always, time will tell.
NOTE: The information and statistics contained in the above charts are deemed reliable, but not guaranteed. If you’re contemplating a major financial decision regarding residential real estate, please do yourself a huge favor and consult with a reputable real estate broker, attorney and/or accountant.
FHA Updates
The FHA Reform Act of 2010 has passed the House in an overwhelming fashion. The amendments calling for increased FHA down payment requirements have been rejected. A second potentially damaging element that called for FHA exposure to be limited to 10% of the market has been shot down. Bottom line is that FHA loan default rates are down significantly and the program is operating more effectively than it has in quite some time.Another hot FHA issue still in the “proposal” stage surrounds monthly mortgage insurance premiums (MIP). Right now, FHA’s MIP is calculated at .55% of the loan amount per year. This translates to a $91.67 MIP on a $200,000 FHA loan. The current FHA Reform Act requests a monthly mortgage insurance cap lift to 1.55% (from the current .55%). This represents a nearly 300% increase. HUD/FHA has stated that while it is requesting the “right” to go up to 1.55% they will likely only raise the factor to .90% for the time being. If so, the change would take that same $91.67 MIP payment to $150.
Stay tuned, folks. The FHA ride is likely to be a long and wild one!
When Can a Short Sale Seller Buy Again?
Thanks to one of my favorite Mortgage Consultants, here’s some very interesting information for those involved in or contemplating a short sale of their home.
HUD recently released its ruling on when and how soon a borrower may use FHA financing after
survivingclosing a short sale. Here is how it is going to work (effective immediately).- A buyer can immediately purchase a home if they executed a short sale on a previously owned residence, IF:
- They were current on their mortgage and other installment debts at the time of the short sale (no 30 day late payments in previous 12 months from time of new loan application for new purchase), OR
- The proceeds from the short sale serve as payment in full.
2. A buyer must wait 3 years from the time of a short sale, IF:
- They did a short sale simply to take advantage of declining market conditions, AND
- They are looking to purchase at a reduced price, a property that is similar or superior and within a reasonable commuting distance from the property that was sold short.
- They were in default at the time of the short sale
The exact methods being used to determine bullet 1 of reason 2 were not discussed in the mortgagee letter. However, it is expected that they will need to explain and document a legitimate reason as to why the short sale was necessary. That reason would need to indicate that the client did not short sale merely to adjust their mortgage liability to current market values by selling one house short and buying a very similar or “better” house in the same marketplace.
Exceptions may be made to bullet 3 of reason 2 IF:
- The default was due to circumstances beyond the borrowers control (death of primary wage earner, long term illness etc…), AND
- The review of the credit report indicates satisfactory credit prior to the circumstances beyond the borrowers control that caused the default.
In my personal opinion, this new HUD ’statement of clarification’ provides many more questions than answers. Time will only tell, but I’ll be attempting to keep you updated.
Image courtesy of ebmorse.
