Real Estate

Affordable Housing in Oklahoma City

Affording a home of your own on a limited budget seems to be getting harder and harder. The cost of housing continues to increase faster than most people’s paychecks. This includes both to rent and to purchase. Part of this is the constant increase in taxes and insurance. In addition, as people continue to move here it increases the demand for housing. As demand rises the cost of housing goes up. So, what is a person to do. In most cases buying is still less expensive than renting provided you are planning on living here for a length of time. If you are planning on living her 3 years or less, renting may be a better option.
When trying to maximize your buying budget, find a Realtor who knows the market and can help you know a good value when you see one. You may be able to get a better deal on a home that needs some cosmetic updates versus one that has been all dolled up and staged. Be careful of large projects if you are unfamiliar with construction repairs as those could cost you more than you originally budgeted for.
Look around for insurance. Call three or four different insurance companies and get a quote. You may want to transfer your car insurance in order to get a multipolicy discount. Ask the agent how that would affect your policy. Make sure that you review your policy yearly. You may need to change insurance companies if the rate is going up too much. Just make sure you know your roof will be covered if you change. It would be awful to change carriers for $100 a year difference and then find out that the hail damage your roof received should have been covered under your old insurance company.
Review the property taxes. You will get a new assessment of the homes value every year, generally around March. Look at it. Does the county believe your property has gone up or down in value? This is the taxable value and not the amount of money someone will pay you for it. The county does get it wrong sometimes. I saw a lady’s taxes fluctuate year to year significantly because she lived near a golf course. The years when the homes that backed up to the golf course sold her taxable value would go up $10,000-$15,000. The next year homes on the gold course wouldn’t have sold and her taxable value would hold or go down a few thousand dollars. She was living on a small income and was having a hard time with the payment due to the increase in property taxes over the years. I advised her to review her assessment yearly and protest the increases with the county. You cannot wait until you get your tax bill in November or December to talk to the county. Do it when you get your assessment. You only have 20 days to protest. She was also older and would shortly be eligible for a senior freeze. This would freeze the valuation so that it would not continue to go up yearly.
Being diligent in reviewing your taxes and insurance is one way to help keep your payments affordable. If you have real estate questions or are looking to buy or sell or invest in real estate, I would love to visit with you. Feel free to contact me at 405-213-2992 or visit my website. http://www.equityhomesteam.com

Real Estate

The cost of mortgage insurance

Lots of home buyers get a FHA loan especially first time home buyers with limited credit history. This is a good loan product that is backed by Housing and Urban development.  This loan allows buyers to buy with a minimum of 3-1/2% down payment. This down payment may be gifted, or come from a grant or down payment assistance such as the bond program. This helps lower income buyers participate in the home buying process.

Since FHA allows buyers to buy with a low down payment and often have little to no money of their own invested in the property, the risk of foreclosure is higher. Therefore mortgage insurance is required. Mortgage insurance protects the bank incase the borrower defaults. Unless a borrower puts a minimum of 10% down on a FHA loan, the mortgage insurance remains on the loan for the life of the loan. Consequently, a borrower with a strong credit history and a high credit score may decide to use a conventional loan where the mortgage insurance will fall off after the value reaches a 78% loan to value or the borrower requests it at an 80% loan to value.

FHA charges an upfront fee, currently 1.75% of the loan amount as well as a monthly fee.  Recently the government lowered this fee from 1.35% per month per annum to .85% per month. This is a huge savings for buyers using a FHA loan.

How this equates.   I will use a 100,000 loan for ease of numbers. Note the savings on a $200,000 loan are double.

100,000 loan with a 1.35% per month per annum fee is $112.50 added to the loan each month.

100,000 loan with .85% per month per annum fee is $70.83 added to the loan each month.

This makes the monthly mortgage payment more affordable. This is a substantial savings over the life of the loan.

If you are looking for an experience realtor to help you buy a home, sell a home or invest in real estate, please call me at 405-213-2992 or visit my website at http://www.sandiwalker.com

HUD Properties

HUD will no longer provide an appraisal on their properties

HUD has changed the rules again on the repo properties. For as long as I can remember HUD has had an appraisal on the property that they are selling and used the appraisal price as the list price. They would also state if it was insurable or non- insurable. Meaning that it would be allowed to go FHA with some repairs or not (see a previous blog). Now HUD is no longer providing their appraisals to the buyer. The buyer must obtain their own appraisal.
HUD has not explained why the change in procedure nor have they explained some of the ramifications that can now occur under these new guidelines. The following are some questions that persist.
What if the appraisal comes in low? Will HUD change the price to the buyer to match the new appraisal price or will the consumer need to bring additional funds to closing?
What if the escrows are vastly different?
What if the new appraiser will no longer allow the property to go FHA?
Does the old standard of insured vs non-insured still apply?
Having spoken with various people including asset managers and listing agents, the facts are still very unclear. It seems most agree that if the appraisal comes in low that the property will need to be put back on the market, unless the buyer will pay the difference between the new appraised price and the contract price. Although I do not know if it will go back at the same price or the new appraisal price. The HUD asset manager was not sure when I asked.
Please know that two appraisers can have two different opinions of price and condition. This may result in a buyer paying for an appraisal on a property that they cannot get financing. This creates an issue for my buyers attempting to purchase a repo in order to save money. They will need to look at the condition of the property more carefully and decide if they are willing to risk the cost of an appraisal to learn if the property will indeed finance.
This may scare off owner occupant buyers and cause more HUD properties to be sold to investors. Only time will tell.
My personal thought is that HUD will try this approach for 6 months or so and then review the facts and determine if they are going to continue to sell property this way or not.
If you are looking to purchase or sell a home in the Oklahoma City area, I would love to help you. If you have questions regarding real estate, please call me. 405-213-2992 or visit my website http://www.sandiwalker.com

Real Estate

Appraisals are just opinions

Currently there is not a lot of inventory available and many homes are having multiple offers on them. After viewing several homes, my buyers decided to place an offer on a house for the list price and request closing costs. They felt the list price was fair and if they received the closing costs then they would have a good deal.

The offer was accepted and the inspections and the appraisal were ordered. The inspector found only minimal items wrong with the property. The appraiser measured the house and discovered it was slightly bigger than the county records. He also found only a few comps and called me to ask if I had other comps. I shared what I had but he was not satisfied, so he called the listing agent. This sometimes occurs in an appreciating market.

The appraiser told me he was coming in several thousand dollars low and I wanted to cry. Then the strange thing happened. The listing agent got a call from another appraiser wanting to do an appraisal on the same house. We called the first appraiser back. He said, yes he had been out to the property and couldn’t get the value or didn’t feel comfortable with the comps he had to use, so he rejected the appraisal. There would be no charge to the buyer.

A new appraiser came out and was able to substantiate value for the sales price and we were able to close.

Once again I reiterate an appraisal is an opinion of a third party as to value and condition so the bank knows that the collateral they are lending against has merit. A property like anything else is only worth what someone is willing to pay for it. I do not believe that the buyer overpaid for this property. I do believe that there were few comps to review to make a decision on whether the bank was loaning on a property that had the value to use as collateral.

Some may ask why the disparity between appraisers. Appraisers determine value of the property based upon the contract and the other properties in the immediate area.  Appraisals are always comparing properties looking backwards for homes that have sold within the past several months. If inventories are low then the market may be appreciating and the comps from a few months ago will be lower. In a market that is increasing or decreasing in value, this can always be a little tricky especially if there is limited inventory.

If you are interested in buying or selling a home, please feel free to contact me at 405-213-2992 or http://www.sandiwalker.net

Real Estate

Is the market rejecting you?

Sometimes sellers want to list a property based upon what they need in order to pay off the property or for some amount that they need to move. However the value of a property is only worth what an educated buyer is willing to pay for it. Buyers today have lots of electronic information to help them get the best deal possible. They are looking to pay fair market value or to get a deal.
If your home is listed on the open market and you are not getting any showings, I am positive your home is over priced for the market. I believe that you need a certain number of showings in a week to get the property sold. This number will change based on your selling price.
If you are getting showings but you are not getting offers, then there is something wrong with the property. The buyers are finding something else that meets their needs with more amenities or is cleaner or perhaps is more updated. Feedback in this instance is critical. If the seller can fix the items that causing buyers to buy something else, then the property will sell. If they cannot fix the items that buyers are stating as reasons for not purchasing the property; i.e. room size, layout, or location; then the seller will need to lower the price to compensate for these items.
Everything will sell provided it is priced correctly and marketed effectively. And while advertising a property so people know it is available is crucial, pricing is probably the most important part of marketing. If a home is not priced correctly, it will just sit on the market and help other properties around it to sell.

If you enjoyed this post, please follow my blog. If you have questions, regarding real estate, please feel free to contact me at 405-213-2992 or visit my website at http://www.sandiwalker.net

Real Estate

Why do we do appraisals?

An appraisal is required when getting a loan, because the lender wants to know that the collateral (property) is worth what they are loaning on it. Since the underwriter is not going to drive out to every property they lend on, they require the borrower to pay for a third party person to review the property and compare it to other properties in the area. The appraiser is also required to verify that the property is in a condition suitable for lending and meets certain lending guidelines.
The appraiser does receive a copy of the contract. They then measure the property for square footage, note improvements, or deficiencies, and try to justify why an educated buyer would pay the amount they are willing to pay via contract using area comps.
A lot of my buyers will ask when the house comes back on appraisal for value, why it didn’t come back for more. I always respond that something is only worth what someone is willing to pay for it. The appraiser’s job is to justify to the lender why you believe the property is worth what you are willing to pay for it. If the appraiser cannot find past properties that have sold for values that justify why a buyer is paying what the contract states, the appraisal will come in low. Rarely does the appraisal come in for more than contract, because if the property was worth more than the sales price a buyer would have paid that in a free market.
In an increasing market, appraisals may come in low because appraisers are looking at historical data, while in a decreasing market, appraisals may come in high. The appraiser is always looking in the rear view mirror to see what is happening in the market. They tend to use comparable properties that have sold within a six month period

If you enjoyed this post, please follow my blog. If you have questions, regarding real estate, please feel free to contact me at 405-213-2992 or visit my website at http://www.sandiwalker.net

Real Estate

Do I really need a home inspection?

There is no law that says you need a home inspection when purchasing a home. The lender does not require that you get a home inspection. The lender may require that you get a clear termite inspection, depending on your loan product.
However, don’t you want to know what you are buying. Buying a home is an emotional decision, one where my buyers look at a home and ooh and aah over all the pretty things in the house. The new carpet and fresh paint look great and the granite counter tops are gorgeous, but what about the heat and air, the hot water tank and the roof.
A home inspection is for the buyer. In my opinion the buyer should be present, not just their realtor. The home inspector should check all the mechanics of the property and list any and all defects of the property. If you have questions about something mechanical, this is a good time to ask questions.
You are not required to repair these or even have the seller repair these items. In some cases, foreclosures, the seller will not repair anything. After the inspection, you may make an educated decision on whether to continue the sale or cancel it. It is at this point you can ask the seller to make some repairs to the property. Remember, repos will generally not make any repairs.
When buying a large purchase such as a home, educate yourself to all the facts prior to closing on the deal.
If you enjoyed this post, please follow my blog. If you have questions regarding real estate, please feel free to contact me at 405-213-2992 or visit my website http://www.sandiwalker.net