Tag: appraisal services
As appraisers are dropping out and retiring from the appraisal field due to strict guidelines on qualifications and education requirements the AQB (Appraiser Qualifications Board) has been rethinking the current set of standards applied to Licensed and Certified Appraisers. The … Read More..
LOAN NOT APPROVED! This is the last thing a potential buyer wants to hear from a bank when trying to purchase a home, but now with Fannie Mae easing the financial standards of the debt to income (DTI) ratio. The DTI will be raised from 45% to 50% on July 29. What determines your DTI ratio? DTI is a ratio that compares your gross monthly income to your monthly payment on all of debt accounts. Included in this is your monthly credit card bills, auto loan payment, student loan payments, etc., and the monthly projected payments on the new mortgage. A $6,000 household monthly income and $2,500 in monthly debt payments, your DTI is 42 percent. Lenders use this ratio to evaluate your current debt load and to see how much you can responsibly afford to borrow. Less debt equals more borrowing power. If you are loaded down with monthly debts, you’re at a higher risk of falling behind on your mortgage payments…this is not rocket science.
Researching data that spanned nearly 15 years, Fannie Mae’s researchers analyzed borrowers with DTIs in the 45 percent to 50 percent range and found that a significant number of them actually have decent credit and are unlikely to default on their home loans. Significant enough to raise the ceiling and stick their neck out just a little bit more for buyers. Lenders are excited about the policy change giving those buyers just over the 45% threshold a chance in the marketplace. All applicants still need to jump through the multitude of hurdles when it comes to Fannie Mae’s underwriting criteria. The criteria entails down payment, credit history, income, loan-to-value ratio and a mountain of other financial criteria.
The largest population rejected because of high DTI ratios are the Millennials, who often stretch to pay their rent early in their careers. Millennials are the generation born between 1980-2000, which means that the bulk of Millennials are entering the prime home-buying age. They are a new targeted demographic with a lot of marketing being angled toward them in an attempt to attain their buying power: could this expanded ratio correlate with the Millennial?
Millennials are the demographic group helping Baltimore City gain population for the first time in a half century. Harford County is having a more difficult time attracting this market sector: Millennials are looking for mixed use communities, transportation, dining and shopping opportunities. Baltimore County also has tried to cater their communities around this sector of the population.
Regardless of what age or demographic you may lie in, Fannie Mae may not be your only option if your DTI is above 45% or even 50%. As of 2016 FHA (Federal Housing Administration) guidelines maximum debt to income ratio of approximately 55% with compensating factors. FHA does have a major drawback, it requires the borrower to keep paying mortgage insurance premiums for the life of the loan, well after the risk of financial loss to FHA has disappeared.
Having a hefty amount of debt, whether it be from student loans or shopping sprees, may not deter you from being a homeowner with the added help of Fannie Mae increasing the DTI ratio. With the decision of easing the financial standards of the DTI ratio to increase a broader base of buyers I hope it comes with an increased amount of caution for the future of the housing market. As an appraiser for properties in Baltimore County, Baltimore City, Harford County, Howard County, Cecil County, Carroll County and Howard County during the housing crash when the easing of requirements regarding lending money did not bode well I remain watchful on the recent decision for the broadening DTI. The housing market crash, which started in 2007 should be a constant reminder and lesson for the easing of standards and what sort of repercussions it could bring.
Already this year we have seen a shortage in the supply of homes on the market. With the beginning of the spring season upon us buyers are waiting with bated breath ready to pounce on the purchase of their new home. Comparing active listings from last March (2016) to this March (2017) in the Baltimore Metro Area housing market (which includes the City of Baltimore, Anne Arundel County, Baltimore County, Carroll County, Harford County and Howard County) the results are undeniable. The number of active listings declined by 15.8% to 9,453, the 19th consecutive month of declining year-over-year inventory levels and the lowest March levels in a decade.
Although this listing shortage seems to be problematic for buyers, there is an upside for the sellers. The basics of supply and demand states that when the demand for real estate is high, prices rise. When the number of available properties increases, prices usually drop. With anxious buyers waiting in the winds, a beneficial opportunity presents itself for the sellers.
With a shortage of homes in the market the homes typically spend less time on the open market with sellers receiving quick offers close to the list price and some even higher to ensure the offer is accepted. The average percentage of original list price received at sale in March was 95.1%, the highest March level in a decade, exceeding the previous high set in March 2014 and 2013 of 93.2%. The median days-on-market was 42 days, down from 63 days last year, and at the lowest level in a decade.
Due to listing shortage, the homes that are available on the market are getting scooped up. Sales across the Baltimore Metro area was up 21.7% from last year to $923.8 million. March closed sales of 3,288 were up 16.8% compared to last year and set a record high for the decade.
This data was compiled by the Multiple Listing Service (MLS) data in MarketStats by ShowingTime’s database based on listing activity from MRIS (Metropolitan Regional Information Systems, Inc.).The Baltimore Metro Area housing market includes the City of Baltimore, Anne Arundel County, Baltimore County, Carroll County, Harford County and Howard County in Maryland.
Low inventory, a strong demand for homes and springtime are a wonderful combination for a seller’s market. This is coupled with the fact the homes are typically on the market for less time than past years and the increase in sales makes this one of the best times to sell…in almost a decade! Listing inventory has not been this low in the peak spring season in quite a long time, if you are a seller or thinking about selling, this may be the best time to put your home on the market.
Interest rates, global events, inflation and tax reform are just a few economic variables that could help or hinder the future of the real estate market. The real estate market is constantly changing but the current storm of circumstances puts the seller in an advantageous position, one that may not last very long.
Waterfront homes, flood zones, flood plains, lowlands….when do you need flood insurance and when are you required to get flood insurance? Flood insurance is specific insurance coverage against property loss from flooding. To determine risk factors for specific properties, insurers … read more
Maryland Appraising Appraising real estate in Maryland involves properties of all facets. Properties in Maryland range from waterfront, working farms, mountainside retreats, vacant lots, condominiums, townhomes and single family homes to name a few. Each county offers its’ own spectrum … read more
Appraising properties in real estate is tricky business for real estate appraisers. The vast value range, emerging markets, government housing and rehabilitation projects are just a few things a Baltimore City appraiser encounters when navigating the proper choice of comparable sales when determining the appraised value of a Baltimore City property. With more Millennials and empty-nesters moving downtown, there’s a renewed interest in the urban living experience causing an increase in appraisal work.
Lending institutions are quite cautious when reviewing a Baltimore City appraisal. Often values differ block to block depending on location of the water, monuments, parks, etc. The distance between the comparable properties and the subject property within an appraisal are highly scrutinized. Part of this scrutiny stemmed from the Baltimore City flipping scandal. With such diversity in value within a small radius due to the density of homes allow a large pool of settled sales to choose from. It is unethical, criminal and against appraisal practices to inflate the values of properties.
HB 521, a bill passed by the state legislature in the wake of the so-called “flipping scandal” of the 1990s, created a database of property appraisals in Baltimore City. Since 2003, every home appraisal done in the city was supposed to be given to the Department of Housing and Community Development, to be kept in files in case investigators ever needed to track down and investigate suspicious appraisers and/or lending practices.
Charm City is a city that bounces back regardless of setbacks. There are more than 40 homebuyer incentives that people could potentially qualify for when buying a home in the Baltimore City. They range from $1,000 to $30,000. These are for primary residents, not investors and you can stack them if you quality for more than one. You can go to http://livebaltimore.com/
It is not only traditional buyers that are getting into Baltimore City real estate, even developers are turning a number of historic buildings in downtown Baltimore into amenity filled apartments. 26 S Calvert Street features a rooftop deck and mini basketball court, and 10 Light Street is a building that Metropolitan Partnership is turning into 400 luxury apartments.
With the growing demand of real estate in Baltimore City this leads the appraisal community with a responsibility for quality appraisal reports within lender guidelines that follow uniform standard appraisal practices.
Charm City is becoming more charming each year with expansion, renovation and opportunity. Robinson Appraisal Group can help you with all of your appraisal needs. Our services include estate appraisals, conventional appraisals and FHA appraisals to name only a few. Our office does a multitude of reports for the Baltimore County, Baltimore City, Harford County, Cecil County, Carroll County, Anne Arundel County and Howard County areas. We look forward to helping you in the future with an appraisal for your Baltimore City property. As our Baltimorean counterparts would say, Thanks, Hon!
What is involved in appraisal?
Wondering what an appraiser does when it comes to your home appraisal? What do they look for? How do they determine the value of your home?
Bottom line….it all depends on homes that have SETTLED in your area. With so many internet searches available about home sales, the one most important thing to note is the settled price. The predominant amount of websites reflect the price the property is being offered for, not the actual settled price upon closing. Assuming it will go for full list may inflate your assumption of your own home’s worth.
After the appraiser gathers data from your tax record, aerial view of the property and possible prior listing(s) the appraiser will contact you for an appointment. At this time they will retrieve the unknown information regarding updates, rooms, bathrooms, finished basement, exterior amenities/outbuildings and any unusual or special things regarding the property. With this information appropriate comparable properties that have sold in the market area can be chosen on the basis of similarities. Some of the similarities that are most relevant when determining market value value are the location, gross living area (amount of square feet above ground), acreage, age, condition, updating and amenities.
Upon inspection of the property the appraiser will measure the exterior dwelling and any possible additional structures (deck,barn,shed,patio…) deemed necessary for valuation. When inside the appraiser will compile a floor plan, types of flooring, overall condition and quality of construction. The information from the subject property (property being appraised) is compared to the pool of settled sales to determine the closest matches: the most similar properties will then be chosen upon likeness to determine market value.
The major phase of the valuation involves the application of the three approaches to value which include the Sales Comparison Approach, the Cost Approach and Income Approach. The three approaches are reconciled and the value (via most applicable approach)is selected as the final estimate of value.
The most relevant approach to determine the market value of a property in residential real estate is typically the “sales comparison approach”. This approach uses the characteristics of each settled property verses the subject property in a form where the characteristics are broken down line by line to give each item value. For instance, if your home has a fireplace and one of the settled comparables do not a +$3000 amount would be added to the settled comparable price to adjust for the absence of this amenity. The amount of fireplace value varies depending on price range of properties. Other line items include acreage, bathrooms, age, finished areas in basements, location/view,updates, amount of garages, outbuildings, decks, patios, exterior materials, quality of construction and (but not limited too) condition are all items valued in the report to determine the fair market value. There are typically 3 to 4 settled comparables used to determine the market value and possibly 2 more pending or active properties to reflect the current market and support the market value. Pending properties(due to the fact there is an offer) are preferred. Once all the settled sales have been adjusted for their differences (compared to the subject property) the 3 to 4 settled sales provide a range of value in which the appraiser then determines the market value from this range. The pending/active properties in the report then typically provide support for that choice.
It is the appraiser’s responsibility to adequately research the local real estate market and determine which comparable sales best represent the value characteristics of the subject property.
Current guidelines require a report to be in UAD form. To improve the quality and consistency of appraisal data for loans delivered to the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, at the direction of
the Federal Housing Finance Agency (FHFA), developed the Uniform Appraisal Dataset(UAD), which defines all fields required for an appraisal submission for specific appraisal forms and standardizes definitions and responses for fields within the report. An appraisal report in UAD causes some confusion to the reader of the report because of areas on the report that are coded for a computer to extract information. If any questions arise feel free to call your appraiser for clarification. Our office does a multitude of reports for the Baltimore County, Baltimore City, Harford County, Cecil County, Carroll County, Anne Arundel County and Howard County areas. Robinson Appraisal Group will be more than willing to answer any questions or provide explanation for any report performed by one of out staff appraisers.
The main responsibility of an appraiser is to provide an unbiased, comprehensive and expert opinion about a specific market value for real property. Regardless of whether you decide to sell, refinance, settle an estate or you are just curious about your home’s current value let us help to inform you on the most important transactions in your life!
The Estate Appraisal ……where to begin? Coping with the loss of a family member or loved one may be one of the hardest challenges that many of us face. In addition to coping and dealing with that loss it is … Read More..