July, 2014

Analysts See Reasons for Housing Optimism


2013-01-29-Hope_My2030Even though the first half of 2014 didn’t live up to the hope and hype, industry insiders are still calling for better days in the housing market for the rest of this year. On Friday, Redfin released its latest market summary, which sees the combination of sales, prices, foot traffic, and inventory as positive signs heading into the fall.

“After an abysmal first quarter that drove a disappointing first half, housing will be playing catch-up for the year,” said Nela Richardson, Redfin’s chief economist. “Though it won’t be a seamless transition, we believe the housing market is positioning itself for a stronger finish in the second half of the year.”

Granted, you may have heard the same kinds of optimism in January. The first quarter of 2014 was supposed to show a steady climb in all areas of housing, but hopes were battered by harsh winter weather, a drop in residential construction starts, and a shortage of qualified construction workers.

Things also were supposed to pick up in the second quarter—and they did, but only enough, by most accounts, to stanch the disappointing Q1 numbers.

But entering quarters three and four, Richardson is hanging her predictions on four key points.

First, home sales are catching up to 2013’s highs, which were the strongest since the recession. June sales (114,240) were only shy by 2.5 percent from last June’s, and sales were up year-over-year in eight of 30 metro markets, including Atlanta, Charlotte, and Oakland, each of which were up more than 8 percent, Richardson said.home-sales-are-up

Second, foot traffic is on the rise. According to Redfin, the number of customers going on tours with the company’s agents in June was up 27.1 percent from a year ago. “Tour growth is bucking seasonality trends, which tend to peak in May,” Richardson said.

Whether this trend will translate into stronger sales numbers hinges on whether mortgage supply from banks can meet the increase in demand or whether buyers with large amounts of cash on hand will continue to dominate the market, she said. Cash deals reached their peak in 2011 and have been declining steadily since, but the percentage of cash deals remains higher than the norm and is especially popular forlower-cost homes.

Third, price growth is becoming more sustainable. Even though the median sales price in urban markets topped $300,000 in June, price growth reached a two-year low of 6.4 percent, Richardson said. The stability is most welcome. “Prices over the past three years have been an expensive roller coaster for both buyers and sellers,” she said.

According to Redfin, the fluctuation between 2011 and 2012 was depreciation followed by double-digit growth, and price growth through 2013 averaged 14 percent. “In June, the median sales price grew at half that rate, much more in line with a sustainable rate that won’t have the market panting to keep up,” Richardson said.Housing Inventory

Lastly, housing inventory is returning, albeit slowly. Between 2009 and 2012, the number of homes for sale plunged 44 percent, bottoming at 411,555 homes at the end of 2012, according to Redfin. At its highpoint in 2013, inventory rose to just 477,000 homes for sale and then dropped to 411,761 by year’s end. Last month, and for a second month in a row, the number of homes for sale was above 500,000, which was up 8 percent from this time last year.


The biggest year-over-year increases in homes for sale were in Riverside-San Bernardino and Orange County, California, and Phoenix, where figures were up at least 24 percent for all areas.

“Metro markets continue to get a boost from pent-up demand caused by the low inventory that plagued housing for the past two years,” Richardson said. “The second half will not be without its wobbles. But the housing market can maneuver around the juggernaut of subpar long-term economic fundamentals. Housing is now edging back to normal.”

Author: Scott Morgan/ DS News


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Don’t Let Appraisal Derail Your Sale – 5 Keys to Getting the Contract Price


real-estate-appraisal-720You got a great deal on the house from a motivated seller through your creative marketing strategies.  Your team did an incredible job of renovating, landscaping, and staging the home and it looks absolutely amazing.  The Realtor took beautiful pictures, and along with the description, painted an amazing picture of your most recent masterpiece.  You get a full price offer within just a few days of it being listed and all is right with the world.  That is, until the appraisal comes in $10,000 under contract price and cuts your profit in half.

As an active investor, you always want do what you can to maximize the return on your money, time and effort invested into any project.   Understanding the appraisal process is a crucial step in ensuring that you get top dollar for your investment, and that you get it sold quickly so you can move on to the next deal.  Unfortunately, too many investors take their eye off the ball as they get close to the finish line, and it can cost them dearly.

Let’s take a look at 5 great tips to ensure that you don’t make the same mistake, and that you get the maximum possible valuation for your property.

1. Make sure the house looks GOOD!  This might seem like common sense, but once a property is under contract with a buyer, it’s amazing how many investors will begin to neglect the property. Make sure any minor repairs that may have been overlooked during the renovation get taken care of BEFORE the appraiser arrives. Just because the buyer may not have noticed or cared doesn’t mean the appraiser won’t. appraisal-traditional-landscape

2.  Make sure the YARD looks good! – Again, something you’d think would be common sense, but investors oftentimes mentally “check out” once the house is under contract, but that’s a dangerous attitude to take. Appraisers are affected emotionally just as much as buyers are, and if they come to a home with an overgrown lawn, and weeds overtaking the once beautiful landscaping…don’t be surprised if it shows up in the form of a lower appraisal.

3. Keep it STAGED! – I am a huge fan of staging, and we have all of our renovation properties staged professionally. Even though we have to pay a monthly rental rate on the furniture after a certain point, we ALWAYS leave our staging in the house until AFTER the appraisal. We ALL feel better in a clean, staged home…and appraisers are no different.

He or she will also be taking photos of the home, which will be included in the report that goes to the underwriter for the buyer’s lender.  A staged home will always look better than a bunch of empty rooms, and makes the appraisal much more likely to be accepted by that underwriter.HomeStaging2


4. Make sure that the appraiser chosen for your flip is from the local area – The practice of choosing an appraiser from outside the area became much more prevalent over the last few years, and while it doesn’t make a lot of sense, it’s unfortunately not that uncommon. If you find out the appraiser is from a neighboring town, and therefore less knowledgeable about the local real estate values, don’t be afraid to try and dispute it and request a local appraiser.

5. Meet the appraiser at the property- In the same way that we meet the appraiser or BPO agent at the property during short sale negotiations to make sure the valuation doesn’t come in too high, we also want to meet the appraiser at the property during the resale valuation in order to make sure he has accurate data regarding the after repair value of the home. Be sure to bring along any comparable sales that you used during your pricing decision, so that the appraiser has as much data to support the price. MOST appraisers (unfortunately not all) want to help you out, and to appraise the property at or above the contract price. So, if you help provide them with accurate data, they are more than likely going to use it.

If you follow these tips, you increase your chances of a successful valuation exponentially.  And when the appraisal process goes smoothly, you are one step closer to closing the deal, realizing your profits, & moving your capital into the next investment.

Do you have any strategies that you have used in the past to get a higher appraised value?  Share your thoughts and opinions below, and let’s keep the conversation going!

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