Five Outdated Seller Beliefs Debunked

Rose Colored Glasses Are Out-Dated Too

Any seller who has not sold a home in the past five years is in for a shock, everything they thought they knew about selling a home has changed.

Home Sellers, here are the new rules of engagement which you could easily make a few costly mistakes and jeopardize our chances of a timely sale.

Three Major Changes that have altered the homebuying and selling landscape forever.

Change 1: HGTV. Buyers spend countless hours watching HGTV and have developed extremely refined tastes. They know what they want, and what (in their minds when they look at homes for sale…”As Seen On TV”.

Change 2: Mobile Devices and HIDEF, Highspeed Internet. Expect No Mercy. Today’s sellers have between seven and 10 seconds to sell their home, and those seconds are on a mobile device anywhere on the planet — not in any home for sale. If a buyer does not like your online listing, they’ll move on to the next, in a heartbeat, never to return or review.

Change 3: Internet Real Estate Web Sites. Realtor.com, Zillow, Trulia, Opendoor and a host of broker-owned sites have populated the internet with user-friendly websites that provide property data, historical facts, HD pictures, automated valuations, neighborhood and school info, and more. All the above has completely removed the need for buyers to visit in person to determine if they like a home.

These three changes have not only revolutionized the way buyers search for homes, they have transformed what they buy as well.

Historically, there were three groups of buyers:

Top-tier buyers: Buy move-in ready homes that had all the amenities they were looking for.

Middle-tier buyers: Buy homes in “original” condition, for a decent price and then improve the home over time with sweat equity.

Bottom-tier buyers: Are contractors and flippers looking for distressed properties they could buy for 60 percent to 70 percent of retail value.

The middle tier, which historically represented a significant percentage of market sales, is disappearing. Todays group is paying more to obtain move-in-ready homes that look like the finished properties they have seen on HGTV.

In the past few years, we’ve seen sweeping societal shifts as homebuyer wannabes, for many reasons, are less willing or even capable of fixing up a home they’ve purchased.

With buyers moving away from “original condition” properties they perceive as needing upgrades, homes that appear in the middle tier are being forced down into the bottom tier and need to be priced accordingly. Sellers who do not understand this new reality stand to end up with far less than they imagined.

Seven Reasons iBuyer Direct Offers Are A Bad Deal for Home Sellers.

IBuyers (a moniker for platforms using new technology to make offers on homes and close quickly). Those IBuyer purchase offers aren’t designed to benefit the home seller; they are intended to benefit Corporate Shareholders. The Sellers are conditioned to get low offers and will pay equal or higher fees than from a typical Real Estate Broker and Agent.

1) Inaccurate valuations.  Zillow’s “Zestimate” is like all the other “Valuation”(Non-Appraisal) web sites. They simply exist to get eyeballs and personal information from their website for advertising or transaction purposes. 

2. Low Offers. No person, especially a Corporation that wants to purchase your home directly (With No Market Exposure) will not be offering you “Market Value.”

3. Serious Fees add up quickly. Most folks wince at the average 6% Fee Real Estate Agents Charge. Some Sellers have associated the iBuyer low offer to the average 6% Realtor fee.

Here’s the math: Not only will you, the seller, get a less than real market offer, there are Fees on top of that, like “Experience” Fees, Service Fees combined, exceeding what the Real Estate Agents would have charged you.

Still not convinced? When you sell your home, would you rather pay an agent who represents your interests or a company that serves their interests?

4. A majority of markets don’t need this ‘Service”. In many residential communities across the country, currently have tight Inventory, homeowners don’t even have to put money into updates or upgrades. Too many individuals want to buy homes.

5. Reducing Inventory will Raises Prices. Housing inventory continues to set record lows. Buyers are frustrated, bidding wars and home values escalate.

6. Home Buyers are Competing with Flippers. Investors don’t always flip houses for buyers. They often rent them out. Although not all renters are poor caretakers, there isn’t much incentive to put effort and care into a property.

Get enough renters on the street, and the curb appeal drops significantly. Renters come and go.

7. The negative effect of low offers. Imagine if two or three homes on your street are taking an instant offer. If this becomes a trend, appraisers may not be able to disregard the data.

Moreover, if you, the seller, make an immediate offer, you are messing with your neighbors’ home values.

That might not be your problem today, but it could be in the future.

Who benefits from instant home purchase offers? 

Instant home purchases are designed to benefit the IBuyer or investor under the guise of convenience to the seller.

How Can Sellers Protect Themselves?

 Contact a State Certified Residential Real Estate Appraiser. Their core mandate is to protect the Public Trust in Real Estate Transactions. The Average Fee for an independent Market Appraisal is 500.00, which is pennies on the dollar compared to paying the IBuyer Fees.

And, at the very least, interview a Licensed Real Estate Agent for a Comparative Marketing Analysis before accepting an instant offer. 

Home Owner Maintenance Cost-How it Impacts Sellers & Buyers

Home Owner Maintenance Cost-How it Impacts Sellers & Buyers

All housing components have a life span. Some parts last a lifetime, and others are more or less “consumables” and some lasting only a few years. Maintenance costs go with the property from day one of ownership and are factored to be considered to be at “market value” as defined by a Certified Residential Appraiser. 

There is a life expectancy of most of those, and that is approximately 5-18 Years, and that time goes fast. And if you, as a home Seller that could have a market value impact on your list price with low offers from market participants.

And if you’re a home buyer, performing your due diligence could save you time, frustration, and money. At the end of the day, only you can look out for what is your best interests. In real estate, it’s “buyer beware.” If your experience in real estate is limited, selecting the right professional is paramount for your success by choosing the right deal or falling into a money pit.

No one can better look out for you and your family’s self-interest other than you. Choosing the professional will provide you with that due diligence. Buying a home for the first time or third time can be emotional for those involved. Don’t enable yourself into “sleepwalking” through a home purchase process. “Sleep Walking” is a term for anyone that’s over-reliant on an inexperienced one real estate actor, In addition to not being vetted by you for professional competence.

Selling or Listing Your Grand Rapids West MI Home? Ask these Questions

Selling and or Listing Your Home?

Both REALTOR® Appraiser’s and Appraisal Organizations encourages all consumers to utilize the skills and talents of a local A REALTOR® Agent along with a Professional REALTOR® Appraiser to make the process of selling your home go smoothly and quickly.

The REALTOR® professionals are the one expert resource available to guide you through the home selling process, and the Licensed and or Certified Appraiser is the one expert that will give you factual information about the market value of your home.

Both the REALTOR® Appraiser and the Agent working together as a team will provide the required information you’ll need for your due-diligence so that you can make informed decisions.

1) When interviewing a prospective REALTOR® Agent to list your home for sale, it is essential to understand how they operate. Are they the best resource to assist you in the process? Here are some right questions to ask the Realtor Agent:

2) Do you recommend a homeowner to obtain an appraisal to help set a list price?

3) What are your qualifications to value a property?

4) If you have a Realtor designation to value real estate, how many classroom hours did it take and did you have to pass an exam to obtain it?

5) What are the difference between market value, market price, and cost? Go to Article. http://vacaponline.com/selling-your-home/

Taking the wrong exit on the aspiration highway

Ten Years After the Mortgage Meltdown; Banks will do anything to get around primarily, the cost and secondly the purpose of an appraisal. After all, the Big banks are certainly not making enough money as it is, correct?

Like many folks, I’d assume, most don’t keep up to date with the mortgage and banking industry. Moreover, I can confirm that there have been some very interesting $#*& Going down in the new and improved “valuation space” formerly known as Appraisal, that could jeopardize appraisal accuracy, so grab a cup of whatever you like, and let’s focus forward.

Background and Detail

There has been a five-year-long false narrative campaign that there is a shortage of appraisers that have resulted in longer turn times and higher fees.

Lenders and their AMC’s have been cherry picking the data that Appraiser numbers have declined and that therefore, there are not an adequate amount of active appraisers to meet the demands in the majority of “their” areas.

Who is this source that’s spreading these rumors?

What they’re not sharing is that since legislation went into effect post, 2007-2008 has spurred the creation and growth of “Third Party (Think of HMOs) Appraisal Management Companies (AMC’s) who have appropriated the Fee Appraisal industry like Temp Agencies. 

Systematically, fees paid to appraisers have been steadily “Compressed” as this was how the AMC’s idea of paying appraisers like giving them a minority percentage of the entire Appraiser fee paid by the bank for the Appraiser.

Well, there is a term for this. it’s called “Assumpsit,” which  in English is called “Unjust Enrichment.”) And this has and has been the main reason that many Appraisers refuse to work for these AMC’s. 

And the reaction from the AMC/Lending industry was to utilize the AMC and Lender Associations and lobby groups to implement an ongoing “Appraisal Shortage Fake News” cycle that has finally gained the The Appraisal  Standards Committee to eliminate the four year degree requirement for the Certified Residencial License and lower both the Class Room and Experience hours in 2017. 

Then in 2018, Fannie Mae began the Property Inspection Waiver, and there is Senate Bill 2155 which eliminates the need for an Appraisal in rural America, where it is especially needed.

All Players in the Real Estate Industry affected with “iBuyer, FrontDoor, Zillow Offers” the banks are finding ways to get around the appraisal process and or continuously finding ways to lower the cost of an appraisal to the bank.

This race to the bottom is a one-sided, self-serving pursuit of winner take all. Like the Chinese water torture fable, each of these disruptive business models not only serves to decrease the accuracy and reliability of the service of the appraisal, but for the Real Estate Agent and Lenders as it undermines Consumers and the integrity of NAR, and the financial institutions of our country.

Reader, I’d like to Introduce to you, three new, improved and Cheaper “Valuations” that the Lenders and FNMA are implementing since 2018.

Property Inspection Waivers (PIW), Hybrid Appraisals, and Appraisal Waivers.

1) Property Inspection Waivers- (PIW)In a PIW situation, when the traditional appraisal is not mandated, but instead the buyers’ property value is based on an Automated Valuation Model (AVM) by Fannie Mae’s Collateral Underwriter (CU) program from the Independent Appraiser’s from across the country since 2014. 

There is very little daylight between Fannie Mae’s AVM and Zillow’s “Zestimate” because both rely on algorithms (not boots on the ground data) to base the value of your home and loan. 

Algorithms are both Deterministic ( producing the same output going through the same states) and Non-Deterministic ( will show different behaviors for the same input on different execution and there is a degree of randomness to it.)

Both FNMA and Zillow do not publish or share their methods to either to the Appraisers whos data they use, the Lender or the Consumer. Is that even ethical under statute or current business law? All this allows for margins of error when these fatalist Algorithms machines Appraise”your property.

However, has Fannie Mae factored that in if they’re their costs calculations? No Worries, Fannie Mae (A GSE who was bailed out by the taxpayers in 2009 have absolved themselves, including the originating Lender (as in your local lender) from any future lawsuits that may pop up in the future from current and prospective consumers. Misleading or am I too “judgy.” 

Let’s Summarize: The Government Backed FNMA is not Responsible. The Lender is not responsible, and There is no Appraiser to complain about or their E&O Insurance.

Which practitioner is potentially holding the “Bag”? Could it be the Buyers Agent and their Brokerage?

2) Hybrid AppraisalsA hybrid appraisal is where the functions of the appraisal process are divided up among farmed out to unknown parties, each with their ways of doing things.

The number crunching performed by a certified appraiser and is similar to a desktop appraisal. The Appraiser property observation is farmed out by AMC to a non-appraiser. Which, could be a real estate agent or some other type of property inspector, all who by the way are not familiar with each other’s Real Estate credentials or experience. 

The problem with this type of Fractured (Hybrid) appraisal is that if the property observation is performed by someone who does not hold a State Appraisal Credential and does not know what to look for in that context. 

Knowing what to look for is one of the most critical components of the trained Appraisers job, and the results of the observation get reconciled with the other parts of the professional appraiser. Which can impact the final opinion of value?

 3) Appraisal waivers in rural areas referenced at the top of this post, SB2155 allow the Lender to invoke not only a property inspection but eliminates the need for an appraisal by an unbiased third party appraiser.  What Could go wrong?

Most would state that this is just an example of the “dumbing” down of services across all industries. The Real Estate Industry for both Residential and Commercial is a 25 Trillion Dollar Annual Market, and the wolves are at the door.

In closing – For Home Buyers getting mortgages, before allowing the bank in your negotiations, that you will enable them to perform one of these types of Valuations (they are not appraisals), you should know that you as a Consumer are not achieving your due diligence and need to be aware and accept whatever the consequences.

As for Real Estate Broker’s and Agents and or E&O insurer if you have coverage for this under any of the three Valuation substitutes you’ve have read about today, and most importantly, create a very tight legal disclaimer. 

Home Buyers Demand Accurate Home Measurements

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Home Buyers Demand Accurate Home Measurements

One might think that there is a law that requires the disclosure of the exact finished floor area in a house, no there’s not. Will, the sellers, and their agents get out the measuring tape? The State of Michigan has responded to this demand by passing some laws which require more real estate disclosures.
The total floor area of a house is one of the most important things a seller and buyer needs to know. For years real estate agents, have been using a hodge-podge of methods to estimate residential floor area.

The top Multiple Listing Services (MLS) area that received high errors include either no buildings or room descriptions, or no dimensions. And the most important measurement of all, the above and below ground square footage was part of this list as well.

Some buyers think this is just another way that real estate salespeople are trying to trick them. Without knowing the floor area, the home buyer does not get accurate or consistent information to use in comparing houses. This means that the State Licensed and Certified Real Estate Appraisers can’t make the correct adjustments to the COMPS (comparable sales) and the lenders backing the loan have less accurate estimates of market value on which to base their investments.

We want you to know that our clients can rely on Trust Real Estate Appraisal Services PLC, for the correct footage Buildings and room dimensions. We use the ANSI Z765-2003 defacto standard for Single-Family Residential Buildings Square Footage Method for Calculating your homes Gross living Area and Total Square footage area.

Get in Touch, Order your Measurement today.