sOK, to all my Realtor friends out there that title may bring a chuckle. Unfortunately the public and most underwriters see appraisal results as set in stone.
I'm writing this post because I'm seeing appraisals come in all across the spectrum of value. Not that we didn't have appraisal issues before but now, the law meant to protect the public is actually hurting them. As a Realtor and a licensee in the state of Maryland I'm required to be familiar with the market area I'm listing and selling in. Although I've heard from appraisers that they are also I'm not finding that to be true in practice. Any experienced agent knows the same house in a different neighborhood may be valued differently. This could be because of highway access, road noise, proximity to public transportation or numerous other factors. Of course one would assume an appraiser could look at the area and also make that determination. Unfortunately that doesn't seem to be happening in the real world.
What about distressed properties? I have a listing under contract and on the way to settlement that is the highest sale in the past six months in the subdivision. During that time a number of short sales and foreclosures have sold for well below market. The story turns out well because we got a local appraiser who was wise enough to go outside the subdivision to comp to similar properties that were not distressed. My listing appraised for the full contract price so this story ends well. However I hear horror stories for my fellow agents on almost a daily basis that an appraiser came from two hours away, sent by a management company and came in dramatically under market simply because they didn't know the area and compared a traditional sale to the short sale across the street. In this market that can mean the difference between the seller being able to complete a sale or being forced into a short sale situation or even a foreclosure down the road.
So back to my title, are appraisals really objective? I have actually been told by an appraiser in a CE class that they are. I didn't check his bio to see what planet he was from but I think anyone who has been in this business for more than one transaction knows better. I know many fine appraisers who are diligent and take the time to consider all factors in establishing value. Unfortunately with prices being driven down for appraisals by management companies some (to all you offended appraisers please note I said some) appraisers are cutting corners just to make enough to survive.
I think the answer to the problem lies with a little used resource of late called reason. Legislators, if you must make a law to fix something try tweeking what is in place to make it better. What we see going on now is similar to knocking the house down to change the paint color. To cite an idea I've used before in my blogs, laws made in the heat of passion and in response to an outcry are never good. I suppose I could expand that to deal with a lot that's going on in America today but that's for another blog.
Wednesday, May 5, 2010
Tuesday, April 13, 2010
Buyers beware - or not
I recently ran across a website that held the position that renters win, buyers lose.
Not long ago I registered with stumbleupon.com. It's a great website where you can enter your interests, hit the stumble button and have a rotation of websites randomly come up based on the interests you pick. Of course, one of mine was real estate. Most are either informative or searches. Occasionally I come across one that is pure garbage.
Case in point, an article by a real estate "expert" telling readers that it is foolish to buy a home in this market. I suppose that could be debated depending on the local market conditions. Unfortunately that was not the case being made. Instead the writer used distorted statistics and some very twisted logic to say, for instance that there is no real tax advantage to owning vs. renting.
What about investment potential? I recently got a listing under contract for a young couple that is moving up. The home was purchased before the bubble. Using a little fuzzy math one could say that the seller lost about 60K from it's highest point. However, over the time of ownership the seller actually realized nearly 100K increase. This is the true representation of the benefits of long term investment in real estate. Not only did they see a good increase over time but by buying up in this market they got a great deal on the single family home they're moving up to. You don't have to be a rocket scientist to see that if they wait for the market to "come back" it will cost them. If they see a 10% increase in their 200K townhome they single family they bought at 335K will have increased the same 10%. The net result will be that they lost over 10K by waiting for the recovery.
I've also heard the argument from buyers that they are reluctant to borrow from their 401k's to purchase. Let's look at the performance of the 401k's vs. long term performance of real estate investment. Again, not rocket science.
So buyers beware...beware of real estate experts who are actually blogging's version of shock jocks. Those alarmist souls who don't buy or sell real estate but know all the answers. I would never advocate uninformed decisions in buying a home. Just the opposite. Get all the real facts and make an informed decision. When you do, I think you'll see that real estate is and has always been a great LONG TERM investment.
Not long ago I registered with stumbleupon.com. It's a great website where you can enter your interests, hit the stumble button and have a rotation of websites randomly come up based on the interests you pick. Of course, one of mine was real estate. Most are either informative or searches. Occasionally I come across one that is pure garbage.
Case in point, an article by a real estate "expert" telling readers that it is foolish to buy a home in this market. I suppose that could be debated depending on the local market conditions. Unfortunately that was not the case being made. Instead the writer used distorted statistics and some very twisted logic to say, for instance that there is no real tax advantage to owning vs. renting.
What about investment potential? I recently got a listing under contract for a young couple that is moving up. The home was purchased before the bubble. Using a little fuzzy math one could say that the seller lost about 60K from it's highest point. However, over the time of ownership the seller actually realized nearly 100K increase. This is the true representation of the benefits of long term investment in real estate. Not only did they see a good increase over time but by buying up in this market they got a great deal on the single family home they're moving up to. You don't have to be a rocket scientist to see that if they wait for the market to "come back" it will cost them. If they see a 10% increase in their 200K townhome they single family they bought at 335K will have increased the same 10%. The net result will be that they lost over 10K by waiting for the recovery.
I've also heard the argument from buyers that they are reluctant to borrow from their 401k's to purchase. Let's look at the performance of the 401k's vs. long term performance of real estate investment. Again, not rocket science.
So buyers beware...beware of real estate experts who are actually blogging's version of shock jocks. Those alarmist souls who don't buy or sell real estate but know all the answers. I would never advocate uninformed decisions in buying a home. Just the opposite. Get all the real facts and make an informed decision. When you do, I think you'll see that real estate is and has always been a great LONG TERM investment.
Monday, March 29, 2010
Success in life. Things to ponder daily
Success in life is a deliberate focus. You can let life happen (Downward spiral) or make life happen. Here are some things I've learned along the way that have helped me:
1) Add value wherever you go - There are givers and takers along the way. If you truly want to be successful you must be a giver. Adding value is like planting a garden. Plant and tend the seeds and you'll never go hungry.
2) Be a catalyst. Make things happen - Have you ever been in a room full of people and no one will make a decision. Be the one who gets the ball rolling. You may make a few enemies but one friend you won't make is mediocrity.
3) Give in the area you love - Passion is contagious. Like attracts like. If you try to contribute in an area you aren't passionate about your words and efforts will fall to the ground unfruitful. If give in an area you love you will never grow tired. Your actions will energize you and those around you.
4) If it's buy a new coat or buy a new book, buy the book - Never stop educating yourself. Build up your success attitude and you can own the coat store.
5) Never stop growing - Sounds a little like #4 but it's much broader. Constantly stretch yourself with new things. I have a quote on my desk from Eleanor Roosevelt. It reads "Do one thing every day that scares you" Nothing is worse than a daily life of mundane existence. Challenge yourself mentally, physically, spiritually, and financially. Never be satisfied with the status quo. All living things are either growing or dying.
6) Make your success a "have to" - A life of "shoulds" will never inspire or motivate you. It's like the business owner who plans a vacation and suddenly their business explodes. I once heard it said that you should live every day as though it's the day before your vacation starts. When your back is against the wall there is no room for procrastination.
7) There is no such thing as failure - We have all heard that the difference between the successful and the unsuccessful is how they interpret failure. Every unsuccessful attempt teaches you something. The question is, are you listening?
8) Get a mentor/coach - Find someone or better yet, several people who inspire you. Follow them as best you can. Take their seminars, read their books, listen to their CD's, make them your best friends. Perhaps you will never meet them in person but that doesn't mean they can't mentor you. A coach, on the other hand, is someone you will have direct contact with. It may be by phone or on line but they can help you with the details of your success plan. With a coach comes accountability. That's a word that often brings fear into the hearts of us all but it's absolutely necessary for you to reach your full potential.
So how do we apply these principles? The answer is that we have to break out of our default thinking and question our assumptions. We all have the God given ability to think about what we think about. Operating on the default level is simply a life of reactions based on conditioning. The good news is, conditioning can be changed. The analogy I like to use is, if you walk out of your house tomorrow and realize you have a really ugly shirt on you can go back and change the shirt. Well, if you walk out of your house and have some really ugly thoughts, go change them! There may be some things in life that aren't in our control, but most things are! Change what you can and learn from the rest.
1) Add value wherever you go - There are givers and takers along the way. If you truly want to be successful you must be a giver. Adding value is like planting a garden. Plant and tend the seeds and you'll never go hungry.
2) Be a catalyst. Make things happen - Have you ever been in a room full of people and no one will make a decision. Be the one who gets the ball rolling. You may make a few enemies but one friend you won't make is mediocrity.
3) Give in the area you love - Passion is contagious. Like attracts like. If you try to contribute in an area you aren't passionate about your words and efforts will fall to the ground unfruitful. If give in an area you love you will never grow tired. Your actions will energize you and those around you.
4) If it's buy a new coat or buy a new book, buy the book - Never stop educating yourself. Build up your success attitude and you can own the coat store.
5) Never stop growing - Sounds a little like #4 but it's much broader. Constantly stretch yourself with new things. I have a quote on my desk from Eleanor Roosevelt. It reads "Do one thing every day that scares you" Nothing is worse than a daily life of mundane existence. Challenge yourself mentally, physically, spiritually, and financially. Never be satisfied with the status quo. All living things are either growing or dying.
6) Make your success a "have to" - A life of "shoulds" will never inspire or motivate you. It's like the business owner who plans a vacation and suddenly their business explodes. I once heard it said that you should live every day as though it's the day before your vacation starts. When your back is against the wall there is no room for procrastination.
7) There is no such thing as failure - We have all heard that the difference between the successful and the unsuccessful is how they interpret failure. Every unsuccessful attempt teaches you something. The question is, are you listening?
8) Get a mentor/coach - Find someone or better yet, several people who inspire you. Follow them as best you can. Take their seminars, read their books, listen to their CD's, make them your best friends. Perhaps you will never meet them in person but that doesn't mean they can't mentor you. A coach, on the other hand, is someone you will have direct contact with. It may be by phone or on line but they can help you with the details of your success plan. With a coach comes accountability. That's a word that often brings fear into the hearts of us all but it's absolutely necessary for you to reach your full potential.
So how do we apply these principles? The answer is that we have to break out of our default thinking and question our assumptions. We all have the God given ability to think about what we think about. Operating on the default level is simply a life of reactions based on conditioning. The good news is, conditioning can be changed. The analogy I like to use is, if you walk out of your house tomorrow and realize you have a really ugly shirt on you can go back and change the shirt. Well, if you walk out of your house and have some really ugly thoughts, go change them! There may be some things in life that aren't in our control, but most things are! Change what you can and learn from the rest.
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