Real Estate Costs, Fees and the Mortgage-Backed Securities System

Residential Real Estate is Not an Asset; it’s an Expense. It is a “Non-liquid assets” that cannot be sold or converted into cash easily without a significant loss of investment and time.

That’s why before you buy or sell real estate, contact an independent, third-party professional to advise you properly before you buy or sell your residential property. The Real Estate Industry is a thirty trillion-dollar industry; it’s incredibly complex and loaded with regulations, state and federal laws, good and bad guys, and gals. And more changes have taken place since 2017 that impact real estate costs than the previous 30 years.

If you’re a person who appreciates an honest assessment, then please read on. Residential properties generate no income for their owner; they do, however, create expenses. Let’s start with real estate taxes, property insurance, mortgage insurance, and utility bills.

Now add the ongoing time-suck of interior and exterior maintenance. Now the big one; having to pay contractors when you’re unable to DIY (Do It Yourself) and those costs can bleed you dry. Yes, your home has cash (equity value.) However, you can’t tap into it unless you sell or refinance-which is another costly expense.

Appraisers are State Credentialed and Certified Real Estate Appraisal Experts. Appraiser fees are on average, incredibly modest ($550), and clients gain a wealth of unbiased third-party data and insight into your home and where it stands in your market.

When compared to the Real Estate Salesperson that Markets a modest $200,000.00 home, with the average and typical fee of 6% This will cost a homeowner approximately $12,000. Not including transfer and local taxes, which could run between $1000 and $6000.

Mortgage and Refinance cost. That depends on your FICO score and Lending institution. This process can set you back from a low $2800.00 for the best FICO score up to $9000.00, and beyond.

Every single residential home produces expenses, and you need to view it through that lens. For each dollar you tie up in your home, that’ll be one dollar you can’t invest and use to grow your wealth.

Your Home Budget Painted by the Numbers

  • Create a spreadsheet of your spending priorities:
    Automobile(s) and required insurance, maintenance, fuel.
  • College savings and Loan Repayments
  • Breakfast and Lunch Costs
  • Entertainment, Recreational Expenses like Travel Trailer, Vacations, Technology
    Retirement Funding, Healthcare Costs, Life Insurance
  • Costly Bad Habits
  • Add 10% extra wiggle room for unexpected expenses.

Now subtotal, and subtract from your current single or combined monthly income. In the Lending world, this is Debt to Income (DTI) and what is left is what you can afford to them.

That loan you just closed at your local Lender, will be sold within two to four weeks after you close the mortgage deal, to Government-backed institutions. They are publicly known as Fannie Mae, along with others. They bundle your home mortgage on the open market to thousands of global Investors every single day.

This exchange or process is called a Mortgage-Backed Securities (MBS). And according to The National Association of Realtors report, as of late 2019, 93% of all home sales involve a mortgage, and 88% of repeat home buyers have mortgages as well.

Only a *Certified Residential Real Estate Appraisers have the day to day knowledge, experience, and credential on what the lending system (MBS) requires.

No one else in the involved transaction has the professional credentials to inform you of how the complete Mortgage-Backed Security system works like an affordable and skilled Certified Appraiser. Not the Real Estate Broker/Agent or the Local Lender. After all, they’re required by law to hire a qualified Appraiser.

Trust Real Estate Appraisal Services PLC. Residential Appraisals, Valuation and Consulting Services in Grand Rapids and West Michigan. Data-driven, clear Scope of Work and solution Based Data Services: Deep dive historical and current trends, Suburb Location analysis. We always walk our clients through the best and worst-case scenarios of our products/services. Schedule your Appointment Today?

*A State Certified Appraiser credential allows for Complex properties of any type or Value. State Licensed Appraisers are not allowed to perform complex appraisals. Choose wisely, choose Trust Real Estate Appraisal.

Trust Real Estate Appraisal Services PLC

Hire us before you buy or sell real estate in Grand Rapids of West Michigan. Unbiased, third party market appraisals, valuations and Real Estate Consulting. Our clients receive far more value that what we charge in Fee's.

9 Reasons why the 1st Time Home Buyer Hire a Real Estate Appraiser

In a Real Estate transaction, the decision is on you – the buyer or sellers; make it an informed one by hiring us.

1) Real Estate Brokers and their Agents are not Lenders, Title Examiners, Certified Appraisers, and especially, they’re not Attorneys.

2) When Real Estate Agent’s List a property to market, 92% as of late 2019 Home Buyers will be Financing that home with a Mortgage-Backed Security (MBS).

3) Both the Residential Real Estate Broker and their licensed Agent’s core competency is to market and sell real estate. They do not possess either the Education, License, Experience, and regulatory compliance as NAR Ethics mandates.

4) Residential Brokers and their Agents are to advise their client’s to speak and or to engage the most relevant licensed professional for their customers’ best interest. In the context of financing a mortgage, Lenders are required by law to hire a qualified Licensed or State Certified Residential Appraiser.

5) Real Estate Agents are not responsible for either a higher than the market price or lower than market price “Comparative Market Analysis (CMA).” Only a qualified State Licensed and Certified Appraiser is the acknowledged expert.

6) In closing, if there is to be Mortgage Lending in your transaction in 2020: It’s Individual Lender Policy, Rules, and Stipulations. Then Federal and State Agency rules. And finally, The Uniform Standards of Professional Appraisal Practice (USPAP) which is the recognized ethical and performance standards for the appraisal profession in the United States.

7) USPAP was adopted by Congress in 1989 and contains standards for all types of appraisal services, including real estate, personal property, business, and mass appraisal.

8) Compliance is required for state-licensed and state-certified appraisers involved in federally-related real estate transactions. Continuous updates and Appraisal education occurs every two years.

9) In closing, appraisers have the credentials, continuous education, information, and analysis they need to deliver unbiased and thoughtful opinions of value. This is unlike the “Comparative Market Analysis (CMA),” which is simply a non-standard, non-compliant, subjective marketing and real estate sales tool.

Want to know more about Appraisers? Go to the source

All You Need to Know Regarding Renting Versus Buying a Home

What do you charge for an Appraisal?

As the Residential Real Estate season begins, we’d like to provide this public service post regarding the most common question we get as Appraisers: What do you charge for an Appraisal?

Read More »

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.

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.

Home Buyers-Your Lender Wants an Algorithm to Appraise Your Home

[et_pb_section][et_pb_row][et_pb_column type=”4_4″][et_pb_text] Currently, the terms “Artificial Intelligence,” and “Algorithms” have been sold to the masses as being objective, scientific and unfortunately accurate. What has been sold to us, is and has been, merely a marketing trick to intimidate consumers with accepting algorithms as gospel. A lot can go wrong when collectively, we put blind faith in big data. If Fannie Mae and Freddie Mac now allow ‘Algorithms’ be the ‘Decider’ and not human appraisers for your next Home Loan – Then is it not logical that the laws be updated and enacted to properly reflect and acknowledge that the programmers and their Bosses who’ve signed off on them by holding them to the same level of accountability as both the Licensed and State Certified Real Estate Appraisers? Algorithms are everywhere. They sort and separate the winners from the losers. The winners get the job or a good credit card offer. The losers don’t even get an interview, or they pay more for insurance. We’re being scored with secret formulas that we don’t understand that often don’t have systems of appeal. That begs the question: What if the algorithms are wrong? To build an algorithm, you need two things: you need data, what happened in the past, and a definition of success, the goal that you’re looking for and often hoping to repeat. You train an algorithm by looking, figuring out. The algorithm figures out what’s associated with success. What situation leads to success? Algorithm’s; Artificial Intelligence are 21st-century machines. They require a human being to function. Therefore algorithm/A.I., cannot usurp the human mind. A machine can solve only “deterministic” problems. New data/information would be a surprise. A “deterministic algorithm” is an algorithm which, given a particular input, will always produce the same output, with the underlying machine always passing through the same sequence of states.” The second type: “nondeterministic algorithms” are often used to find an approximation to a solution, when the exact answer would be too costly to obtain using a deterministic one. A nondeterministic algorithm represents a single path stemming into many routes, some of which may arrive at the same output and some of which may arrive at different outputs.
  • However, both are just machines and require a human being to function.
  • Machines do not think
  • Computers lack creativity
  • Devices lack consciousness
  • Only human consciousness produces thinking.
Who are these human oracles from the Banks and their Coders programming these algorithms? What are their goals, their biases, responsibilities, and accountability? In an industry that has multiple regulatory requirements, how do they fly so low under the radar?  [/et_pb_text][/et_pb_column][/et_pb_row][/et_pb_section]

Home Buyers Ask-Why Should I Hire a Certified Real Estate Appraiser?

Our Buyer Clients benefit from our impartial, third-party appraisal, State Certified expertise for an in-depth scope of work based on your home buying needs and requirements.

Buyers ask; why should I hire a Licensed Certified Appraiser?
Appraisers are the go-to professionals for Mortgage Lenders, Attorneys, CPA’s, and individual Buyers & Sellers. Home Buyer 101: You’re Drowning in Data – Typical Buyers will experience the ultimate Data Dump of ever-changing, high-level information, boilerplate disclosures, and Documents to “review and approve in this highly regulated industry. It is almost impossible for many home buyers to absorb and comprehend so much information In the time allowed.

“Let The Buyer Beware”. Is a principle of contract law in many jurisdictions that places the burden on You, the buyer to perform your own due diligence before making a purchase.The term is commonly used in real property transactions but applies to other goods, as well as some services.

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Who’s Helping Whom
Generally, the only advice a Buyer will get is from a Real Estate Agent (Sellers Agent or Buyer Agent). Most real estate agents are diligent and ethical. But they are not qualified to give Appraisal or legal advice, and the successful ones avoid doing so. So, Buyer Beware. Real Estate agent(s) will only earn a commission (get Paid) if and when the buyer purchases the property. If the agent gives the buyer advice which might result in the buyer deciding not to purchase, the agent may lose tens of thousands of dollars. As a result, there is a temptation for some agents to downplay the risks or problems in a particular purchase.

Still, want to Go at it alone? Get in Touch with us Today.

 

 

Attorneys Are You Searching For An Experienced Appraiser?

Trust Real Estate Appraisal Services, PLC, clearly understands that you have a responsibility to carry out the wishes of your clients – but also to guide your clients to what is legal, ethical and what is in their best interests. We also understand that Discovery is a serious process and that we have strict documentation, uniform USPAP workflow processes and maintain excellent record keeping of our field data, checklists and work files.

What You Can Expect From Us

  • Is a clearly written, defensible fair market valuation report.
  • Accuracy, Clarity & Communications.
  • Continuous Improvement and Best Practices.
  • Sustained Appraisal Regulatory and Legal Compliance.
  • How to effectively use or not use our Appraisal Services.
  • A comprehensive Scope of Work.
  • Letter of Engagement.
  • Appraisal Assignment Workflow.
  • Detailed Communications.
  • Established Fee Structure.
  • Disengagement Letter

When it comes to real estate values in West Michigan, you can rely on us for the utmost in professionalism, credibility, and expertise. All our appraisals are delivered by the method you choose; email in Adobe Acrobat, UPS or 1st class mail. Second-day air and overnight available at additional cost(s). We have an agreed turnaround time. When we agree to a deadline, we honor it. You are kept fully informed of our progress, as well as any problems we may encounter. Fair fees, and detailed work; we are at your service.