Nevada Law AB373 Aimed at Homeowners Who Damage Homes Prior to Foreclosure/Short Sale

The Nevada Legislature has taken steps against homeowners who deliberately damage their home prior to vacating the property during the period when the property is in default by criminalizing such behavior. After October 1, 2011 it will be a misdemeanor according to AB373. Persons can be subject to arrest and subsequent prosecution.

Owners may think they are getting back at the banks by taking this action but all they really do is hurt others. The banks are doing just fine. Who is really affected are the neighbors who see their properties decline even further when the home sells for less than it should. The next homeowner, who had nothing to do with the situation, can be affected for years if the damage inflicted by the previous homeowner leads to unnecessary maintenance breakdowns. Also, insurance premiums and mortgage rates can  also rise as the risk to loan in our area increases.

For any questions related to foreclosure and short sales, please contact Shelter Realty at 702-376-7379. You may also email us at info @ shelterrealty.com.

A VA loan is often a better option than a convention mortgage for veteran and active duty military home buyers who are interested in purchasing a Las Vegas home.

With Nellis Air Force Base located near North Las Vegas, we have several VA eligible first-time homebuyers contacting Shelter Realty about taking advantage of the historically low housing prices in the valley.

Unfortunately, the national media has many buyers convinced that the only way they can qualify for a home loan is if they have perfect credit and a huge downpayment.

Over the next several weeks, I’ll be tearing apart the common myths and misunderstandings about mortgage financing in order to help shed some light on the truth about getting approved for Las Vegas mortgage.

Even though each qualifying scenario is unique and requires a full loan approval from a mortgage professional who has experience with VA financing, the following list highlights the main benefits VA loans have over conventional mortgage programs:

1.  100% Financing –

A typical convention mortgage requires an initial down payment that can range from 5% – 20% of the appraised value on a purchase.

I say “appraised value” vs “purchase price” because there are instances when a property does not appraise for the full value of a homeowner’s asking price.  At that point, the borrower would have to pay the difference between the asking price and appraised value, as well as the standard 5% – 20% down payment.

Either way, VA loans generally do not require that initial large down payment based on the standard Loan-to-Value lending guidelines that come with a conventional mortgage program.

2.  Lower Interest Rates –

Another major benefit is that VA loans have comparatively better interest rates.  In some cases, a VA loan mortgage rate can be as much as .50% lower than on a similar conventional program.

Over the course of several years, a $35 – $75 a month payment will definitely add up to a significant savings.

The process of shopping mortgage rates is the same with any program, so it’s a good idea to have a basic understanding of how the markets work if you’re concerned with comparing quotes between a few lenders.

3.  No Mortgage Insurance –

Private mortgage insurance (PMI) is generally required on conventional loans when the loan amount being borrowed is greater than 80% of the value of the property.

The Department of Veterans Affairs does have a funding fee requirement for VA loans. This funding fee can be anywhere between 0.5% to 3.3% of the loan total. However, veterans who were classified as disabled during at least 10% of their time in active duty do not have to pay the fee.

Mortgage insurance is basically in place to protect the lender in the case of payment default or foreclosure.

4.  Qualifying Guidelines –

It is also typically easier to qualify for a VA mortgage loan than a conventional mortgage, especially if you have a recent bankruptcy or foreclosure within the past four years.

There isn’t a hit to the interest rate for lower credit scores, and VA underwriters tend to give special circumstances more consideration if there is a good letter of explanation.

In addition to the benefits mentioned above, VA loans have two payment term options – Fixed or Adjustable Rate.

The difference between the two options is as follows:

• Fixed rate loans have one payment tied to the same interest rate for the entire term, which is typically 15 or 30 years.
• Adjustable rate loans start off with a set interest rate for a predetermined period of time, and then the rate may change based on the specific terms set forth on the note. Know you options, and make sure you understand which program you are choosing.

Refinancing with a VA loan also has many benefits over refinancing with a conventional loan.

Some of refinance benefits include:

• A higher refinance limit (up to 90% and some 100%) than the majority of conventional loans.
• Easier credit requirements, which often make refinancing with a VA loan simpler and less stressful.
• Help from the Department of Veterans Affairs for borrowers currently in default because of financial hardship.
• No requirement of private mortgage insurance.
• The ability to include the VA funding fee with the total amount of the refinance.

Between the tremendous savings and streamlined qualifying guidelines, any veteran who is in the  process of purchasing or refinancing a home should strongly consider using their  VA benefits.

Shelter Realty works with several qualified and experienced mortgage professionals that specialize in helping Las Vegas Veterans qualify for a VA loan.

Please feel free to contact us if you have any questions about VA approved properties or speaking with one of our trusted lenders.

How long after a short sale before I can qualify for a new home loan?

This is the main question most of our Las Vegas underwater homeowners have that are weighing their options of loan modification, short sale or foreclosure.

And, not being able to plan for future home-ownership can add more anxiety to the equation.

It’s frustrating when you struggle to do the right thing and make your mortgage payments on time, and then feel penalized by the system by being denied for new mortgage financing due to a recent short sale that was out of your control.

Obviously, if we’re going to turn this slow market around, banks will eventually have to figure out a way of providing special circumstances for qualified borrowers that may have fallen victim to a financial crisis that was largely influenced by mortgage and real estate fraud.

Well, the good news is that according to recent changes in FHA Financing Guidelines as of March, 2011, Las Vegas home buyers who are as little as one day out of a short sale on a previous property may qualify for a new mortgage.

FHA Day Out Of Short Sale Overview:

You can read the official FHA Guidelines, but the following screenshot created by a friend Scott Schang highlights the main points.

So, what this is basically stating is that unless you did a short sale simply for financial gain, there is a chance you could be eligible for a new FHA mortgage right away.

Examples Of Possible Acceptable Reasons For Short Sale:

• Living in previously owned bachelor pad condo – got married, have kids – 1 bed 1 bath doesn’t accomodate 3+ person family
• Kids move out of home – parents no longer need 4 bed 3 bath home for 2 people
• Relocating because of job
• Death in the family
• Forced sale due to a divorce

Before writing this post, I did a considerable amount of research online, as well as speaking with one of our trusted local loan officers, Brian Maier, to ensure there weren’t any hidden challenges our buyers would face if they planned on purchasing a new home immediately after doing a short sale.

Brian said it is important that the borrowers have a clean mortgage payment history for the past 12 months.

This means that there are no 30-day late mortgage payments on your credit report in the past year.

He also stated that each lender has their own qualifying criteria based on standard eligibility guidelines, such as credit, loan-to-value and debt-to-income ratios.

I certainly understand that the words “May Qualify” probably create more uncertainty than hope, but Brian did mention that some lenders were more lenient than others on what they determined “Acceptable” reasons for a short sale.

Either way, the point is that we are moving in the right direction for making mortgage financing available for “make sense” scenarios.

Our Las Vegas Short Sale expert, Paul Rowe, definitely has the knowledge and track record to help answer any of your selling questions.

If you’re interested in digging deeper about how to qualify for a new home loan please contact us for more information.

Simply checking online for today’s posted rate may not lead to your expected outcome due to the many factors that can cause each individual rate and closing cost scenario to fluctuate.

We can preach communication, service and education all day long, but it’s our ultimate goal to earn your trust so that you can be confident in our ability to successfully lead you through this complex mortgage process.

Since mortgage rates can change several times a day, the following questions will help determine whether or not your lender truly knows what to look for so that they can provide you with the best rate once you’re in a position of locking in your loan:

Who determines mortgage rates, and what are they tied to?

Mortgage interest rates are determined by the pricing of Mortgage Backed Securities or Mortgage Bonds. The media often implies mortgage rates are based off the 10-year Treasury Note, which is incorrect.

While the 10-year Treasury Note has been known to trend in the same direction as Mortgage Bonds, it is not unusual to see them move in completely opposite directions.

How often do mortgage rates change?

Mortgage rates may change throughout the day, however they only change on days when the Bond markets are trading securities since mortgage rates are based on Mortgage Bond prices.

Think of a Mortgage Bond’s sales price similar to that of a Stock that trades up and down during the course of a day.

For example – let’s assume the FNMA 30-Year 4.50% coupon is selling for $100.50. The price is 50 basis points lower from the previous day’s closing price of $101.00.

In simple terms, the borrower would have to pay an additional .50% of their loan amount to have the same rate today that they could have locked in the previous day.

What causes mortgage rates to change?

Mortgage Bonds are largely affected by various market forces that influence the changing demand for bonds within the market.  Some of the key economic factors that have the greatest impact are unemployment percentages, inflationary fears, economic strength and the overall movement of money in and out of the markets.

Like stocks, most fluctuation is caused by consumer and investor emotions.

What do you use to monitor mortgage rates?

There are several great subscription based services available to monitor Mortgage Bond pricing.

The key is to make sure the lender is aware they should be monitoring Mortgage Bond pricing, such as the Fannie Mae 30-Year 4.50% coupon… and not the 10-Year Treasury Note or the news media.

When the Fed changes rates, why do mortgage rates move in the opposite direction?

It is a common misconception that when the Federal Reserve implements a rate cut it is immediately correlated to a reduction in mortgage rates.

The Federal Reserve policy influences short term rates known as the Fed Funds Rate (“FFR”). Lowering the FFR helps to stimulate the economy and increasing the FFR helps to slow the economy down. Effectively, cutting interest rates (FFR specifically) will cause the stock market to rally, driving money out of bonds and creating potential for inflation.

Mortgage Bond holders need to obtain a higher rate of return on their money if inflation is increasing, thus driving up mortgage rates. With the Federal Reserve Board meeting every six weeks, this is an important question to ask. If your lender does not have a firm understanding of this relationship, they may leave your rate unprotected costing you thousands of dollars over the life of your mortgage.

Do different programs have different interest rates?

Conventional, FHA and VA loans can all carry different rates on a 30-Year fixed mortgage. FHA and VA loans are insured by the Federal Government in the event of defaults.

Conventional mortgages are insured by private mortgage insurance companies, if insurance is required.

Typically, FHA and VA loans carry a lower rate because the investor views the government backing as less of a risk. While rates are usually different for each program, it may be more important to compare the monthly and overall cost during the life of the loan to determine which program best suits your needs.

Why is an Adjustable Rate Mortgage (ARM) rate lower than a fixed rate mortgage?

An Adjustable Rate Mortgage (ARM) is usually fixed for a specific period of time. The period is typically 6 months, 1 year, 3 years, 5 years or 7 years. The shorter time period the rate is fixed, the lower the interest rate tends to be initially.

This is due to the borrower taking the future risk of increasing interest rates. The only instance where this would not be true is when there is an inverted yield curve where short-term rates are higher than long-term rates.

Why are rates higher for different property residence types?

Mortgage interest rates are based on risk-based pricing. Risk-based pricing allows adjustments to par pricing for risk factors such as; FICO scores, Loan-to-Value percentages, property type (SFR, Condo, 2-4 Units), occupancy (Primary, Vacation or Investment) and mortgage type (Interest Only, Adjustable Rate etc).

This allows the investors who lend their money for mortgages to receive additional compensation for taking additional risk.

If the borrower encounters a financial hardship, are they more likely to make the payment on the home they live in or the one they rent out?

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Related Mortgage Rate Articles:

• Mortgage Rate Overview
• Top Five Market Factors That Influence Mortgage Rates
• What’s The Difference Between APR and Note Rate?
• How Are Mortgage Rates Determined?
• How Do Mortgage Rates Move When The Fed Lowers Rates?

Seller Strategies

When a Las Vegas listing agent and a client talk strategy, there is one question the agent does not have to ask his/her client: “what are your priorities?” And the reason the agent doesn’t have to ask is because the answer is already known: “Sell my house quickly and at the highest possible price!”

In today’s market that is a tall order, even if the house is exceptional and the pricing attractive, although a property such as just described would certainly sell quicker than most.

But the more houses on the market the more hesitation enters a buyer’s mind, like somebody in a singles bar who sees an attractive girl and strikes up a conversation, but always has one eye on the door, wondering if someone better might come in.

How then do you, the seller, overcome the hesitancy of the buyer, the neighborhood competition and the prevailing buyer’s attitude that even if the home looks good and is priced right, will prices continue to fall, and will I be able to buy this home at an even lower price in a few months or less?

There is no question that selling your home at the present time represents a real challenge for you and your agent. A challenge, yes! An impossibility, NO!

There are strategies to implement and things to be done that can turn the odds in your favor. Keeping a confident mind set and a belief in your strategy is the way to set about marketing your home with determination.

In boxing, a fighter with the determination and the will to win can often overcome superior skill, by causing the less determined fighter to lose confidence. Don’t lose confidence in yourself or your agent.

The first things to do are no-brainers to anyone, either buyer or agent who has done the research, and knows the basic procedures required prior to putting the property up for sale, and that is:

• Fix the place up! Clean, straighten, neaten, organize, that’s known as “staging.” An important part of staging is making the home spotlessly clean and eliminating ALL clutter everywhere, including the garage.
• “Curb appeal” means getting the lawn mowed, shrubbery trimmed, potted flowering plants strategically placed, clean, uncluttered driveway, etc.
• Make all necessary repairs recommended by the house inspector you should definitely hire.
• Your agent knows this, but you should be aware that equally important to the above steps to take is to price the home properly in accordance with current market conditions.
• In order to arrive at a figure that will lure buyers and leave you a decent profit, your agent must do a comparative market analysis, taking into consideration many factors that influence fair market values.

If you want to sell your home in Las Vegas quickly and at the best possible price, give us a call at 702-376-0088 as we have the expertise and negotiating skills that you need in an agent.

Property “flipping” earned a bad reputation is some areas such as Las Vegas, when speculators descended on the Valley a few short years ago, and bought houses at prevailing rates and immediately resold for much higher prices as the demand for housing remained strong. The practice soon resulted in the rapid escalation of residential housing market prices, sending them soaring sky-high.

However, there is nothing wrong or illegal about flipping, except in fraudulent cases, when an unethical flipper in collusion with an equally unethical appraiser conspires to artificially inflate the market value of a property.

When the flipping market was strong, due to the demand for housing, flippers were for the most part selling homes in ready to move in condition. These were homes that received multiple offers as soon as they were put up for sale.

In today’s market flipping has become a greater gamble, since homes in good condition are selling at market price, with not much-if any- profit margin left for the flipper due to housing prices continuing a slow but steady downward spiral.

In fact, because of the unpredictability of today’s housing market, the flipper may buy a house today that will have lost value by tomorrow.

Additionally, if the home is in need of repair, depending upon the extent of the repairs and the time and expense involved, the flipper might be better off holding and renting until the market trends become more favorable. If that strategy is followed the flipper will then be a long-term “investor” and landlord as well.

The flipper who converts to a long-term investor is aware that many properties on the market today are undervalued, and healthy profits will be had in the near – or possibly distant – future, when demand is greater than supply.

Certainly, the cost of buying and repairing a property, the time required to find a tenant, as well as overhead costs as compared to rental income must be considered by the careful flipper/investor before making a commitment to purchase.

Good timing is a very important factor in any real estate investment, but even more so for the investor who specializes in flipping. How much risk is the flipper willing to take? Is the flipper confident in his/her ability to read and forecast market trends? Is the flipper willing to become a temporary landlord?

Another factor to consider, is that a home that seems suitable for flipping may not be as suitable as a rental property for one reason or another.

Another most important consideration in any real estate investment is the exit factor. An exit strategy must be considered before purchasing any property. Since no one can predict the future, market trends can be evaluated intelligently, but it all still amounts to guesswork.

Investors need to have exit plans A, B and C in order to be able to adapt and adjust to any changes and variations in housing supply and demand, as well as the kind of properties that will be most in demand now and in the future.

Although the market value of a property is largely determined by the comparison between similar properties in a given area, the value of a home is, in the long run, determined only by what a buyer is willing to pay.

This means that, if a seller asks $300,000 for his/her home, but the best offer received is for less than that, then the value of the home is actually less then $300,000, regardless of the studies that were done to establish the home’s fair market value at $300,000.

There are a number of factors that can influence a buyer to pay fair market value, location being among the most important of influencing factors.

Good school districts are a powerful influence on market value, and are most likely of greatest importance in considering location relevance.

Convenience to the workplace, shopping, major thoroughfares, public transportation, entertainment districts and recreational facilities offer other location factors that can have an impact upon a property’s desirability, and as a result, market value.

Condition of the home and property is another strong influencing factor in establishing a selling price. Size of the home and lot, as well as upgrades and amenities are still more influencing factors.

Interest rates, time of the year, high or low inventories of available homes, number of distressed properties in a given area, specific neighborhood conditions, proximity to beaches or mountain areas, proximity to industrial areas, high or low crime areas; any or all of these factors will positively or negatively affect home values

Certainly, it is unlikely that any particular area or neighborhood will meet all of a homebuyer’s criteria, so it is important that the homebuyer look at needs versus wants in location and neighborhood amenities, and consider those options along with affordability; home prices, property taxes, etc.

Real estate agents rate a good location as one with high dollar value and an excellent prospect for substantial appreciation. Buyers have a more complex formula for deciding if a home’s price is suitable and its location is what they are searching for.

A buyer’s real estate agent can be a valuable resource in not only finding the kinds of homes that meet the buyer’s criteria, but can be additionally helpful in obtaining data relative to the neighborhood’s school district, shopping and commuting information, crime statistics, etc.

Since location is so important in so many ways, when the potential buyer finds a property of interest he/she should look over the neighborhood BEFORE making an offer.

Drive around during the daytime and at night, during the week and on a weekend to get a good indication of the noise factor, and overall condition of the neighborhood homes. Look for the number of occupied stores as compared to empty, and check with your real estate agent as to rising or declining neighborhood home values.

Under today’s marketplace conditions, with the availability of so many Las Vegas distressed properties, foreclosures, short sales and motivated sellers in abundance, offering properties that can be purchased at considerably under market prices, why would anyone consider making an offer on a home that is unquestioningly over priced?

The overpriced home is probably in excellent ready to move in condition, has desirable upgrades, and is most likely located in a stable and well-maintained neighborhood.

Certainly, the overpriced, but well maintained home looks very good compared to distressed properties that may be in variable states of disrepair. Many buyers might be inclined to pay a little bit more for a property that has passed inspection with high marks.

Comparisons may be made between the true cost of buying a property needing repairs and upgrades and a property that is ready and waiting for you and your furniture, with no additional fix-up expenses, and the answer to this comparison might well be surprising.

Of course, all is not so simple. In the first place, most buyers will not even bother to look at an overpriced home, much less make an offer for the property.

Additionally, the question to be asked is; why would the listing agent not advise the client that the home is overvalued? The listing agent cannot use inquiries about the home to divert buyers to less expensive properties since no one will be calling.

However, the overpriced home may be the dream home some buyer has been looking for, and the buyer’s agent can use some strategic negotiating tactics to try and work out a deal that would be agreeable to all parties.

First of all the buyer and his/her representing agent needs to find out why the home has been priced out of market.

Could be that as mentioned previously, the listing agent might be inexperienced, and neglected to do a comparative Market Analysis (CMA) to aid the seller in setting a realistic at or under market price for the home. As a result, the buyer might be unaware of how far out of line the asking price might be.

Could be that the seller has an inflated view of what the property is actually worth, and has refused to consider the advice of his agent.

A savvy buyer’s agent, knowing that his/her client really loves this property, would offer to provide the seller and listing agent with a CMA, and an estimate of what a fair price for the property would be, and would follow-up by making an offer that would be closely in line with the market analysis.

By pointing out market conditions to the seller, and affirming that the buyer has been pre-approved by a lender and is in a position to purchase, particularly if there are no contingencies to complicate the deal, the buyer may now be in a position to buy that dream home at a mutually agreeable price.

If you are interested in selling your Las Vegas Home and have any questions about the process or the need to do a short sale, feel free to give us a call at 702.376.0088 or fill out the form below or to the right.

Hey, I gave my real estate agent a $5000 Earnest Money Deposit check… Where does that money go?

A basic and very obvious question that most first-time home buyers ask once their purchase contract gets accepted. An Earnest Money Deposit (EMD) is simply held by a third-party escrow company according to the terms of the executed purchase contract. For example, there may be a contingency period for appraisal, loan approval, property inspection or approval of HOA documents. In most cases, the Earnest Money held by the escrow company is credited towards the home buyer’s down payment and/or closing costs.

*It’s important to keep in mind that the EMD may actually be cashed at the time escrow is opened, so make sure your funds are from the proper sources.

The Process:

1. Earnest Money is submitted to an escrow company with the accepted purchase contract
2. At the close of escrow, the EMD is credited towards the down payment and / or closing costs
3. If there are no closing costs or down payment, the the EMD is refunded back to the buyer

Who Doesn’t Get Your Earnest Money:

• Selling Real Estate Agent – A conflict of interest
• Sellers – Too risky
• Buying Agent – They shouldn’t have your money in their account

Buying a home versus renting is a big decision that takes careful consideration.

While there are several biased sources that can make arguments for or against owning a home, we’ve found that most home buyers base their ultimate decision on emotion.

Yes, there are some tax advantages of owning real estate, as well as the potential to earn equity or pay a mortgage note off after several years.

However, let’s address some of the more obvious topics of discussion first.

Benefits Of Renting:

Lower Acquisition Cost –

Unless you’re able to qualify for a mortgage loan with zero down and have your closing costs paid for by the seller, a typical investment to purchase a home is around 3.5% – 7% of the purchase price for down payment and closing costs on an FHA mortgage, and an average of 13% – 23% for a home secured by conventional financing.

Compared to the cost of about 1-3 month’s rent payment, it’s obvious that renting a home makes financial sense in the short-term.

Lower Qualifying Standards –

While the FHA and other Government Insured mortgage programs have flexible credit / qualifying guidelines than most traditional home loan programs, there is certainly a lot less paperwork and personal invasive probing required by most landlords and property management companies.

Generally proof of employment / income and a decent credit history (or a good explanation) is needed to rent a home.

Freedom To Move –

It’s easy to find a home through a reputable property management company, move in that weekend and then leave a year later when the rental contract expires.  Not being tied down by a long-term mortgage liability is ideal for people new to a community, in a career that keeps them on the go or for parents with children that prefer a certain school district.

Plus, if you’re planning on moving in the next 3-5 years, then it may become cost-prohibitive due to the amount of equity you’ll have to gain in the short-run just to cover the cost of paying an agent, buyer closing costs, transfer taxes…. so that you can at least break even at closing.

Less Maintenance and Cost –

If something breaks, a simple call to the property management company will generally solve the issue in 48 hours or less.  Plus, renters don’t have to carry expensive homeowners insurance, pay property taxes or worry about interest rates adjusting.

Benefits of Owning:

Pets Are Allowed –

Well, according to the rules and regulations of your county or neighborhood HOA, you can pretty much have as many domestic and exotic pets without having to pay extra deposits.

It may seem like a funny benefit to mention first, but the millions of dog and cat lovers would definitely rank this towards the top of their list.

Pink and Purple Walls –

Yep, you can paint the inside of your house any color you choose.  And depending on whether or not there is an HOA in place, you could probably do the same thing on the home’s exterior.  Landscaping, flooring, built-in shelving… it’s your property to renovate and grow in.

Peace-of-Mind and Security –

The only way you would be forced to move is if the bank forecloses on your property due to a default in mortgage payments.

So basically, you don’t have to worry about a landlord’s financial ability to make mortgage payments on time. Plus, you can stay in your own property as long as you wish.

Tax Benefits –

The US government has created certain tax incentives making it possible for many homeowners to exceed the standard yearly deduction.

*Disclosure – Check with your CPA or Tax Attorney to verify your own unique filing scenario*

The following three components of your home mortgage may be tax deductible:

a) Interest on your home mortgage
b) Property Taxes
c) Origination / Discount Points

Stability –

Remaining in one neighborhood for several years lets you and your family establish lasting friendships, as well as offers your children the benefit of educational continuity.

Appreciation of Property –

Historically, even with other periods of declining value, home prices have exceeded consumer inflation. From 1972 through 2005, home prices increased on average 6.5%, according to the National Association of Realtors®.

Forced Saving –

The monthly payment helps in repayment of the principal amount. Also when you sell you can generally take up to $250,000 ($500,000 for married couple) as gain without owing any federal income tax.

*Disclosure – Check with your CPA or Tax Attorney to verify your own unique filing scenario*

Increased Net Worth

Few things have a greater impact on net worth than owning a home. In a comparison of renters versus homeowners, the Federal Reserve Board of Consumer Finance found that the average net worth of renters was just $4,000 compared to homeowners at $184,400.

While the available tax advantages and potential for earned equity are generally highlighted by most industry professionals as the top reasons to own real estate, it’s important to remember that markets go through cycles.

However, owning real estate that appreciates more than the rate of inflation may help contribute towards your overall investment portfolio, provided your maintenance and mortgage costs are kept low.

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Related Articles – Home Buying Process:

• Home Buying Process
• First-Time Home Buyer Credit Checklist
• Assembling Your Home Buying Team – Knowing The Players
• Seven Things Your Agent Should Know About Your Mortgage Approval
• Important Factors To Consider When Getting Financing On A Foreclosure, Short Sale or New Construction
• Where Does My Earnest Money Go?
• HOA Hurdles to be Aware of When Looking at New Properties
• What You Need To Know About The Home Inspection Process

Most people are surprised to learn what appraisers actually look at when determining the value of a real estate property. A common misconception homeowners generally have is that the value of their home is determined after the appraiser has completed their physical property inspection. However, the appraiser actually already has a good idea of the property’s value by the time they have scheduled an appointment to stop by the property. The good news is that you don’t have to worry so much about pushing back an appointment a few days just to “clean things up” in order to help influence the value of your property. While a clean house will certainly make it easier for the appraiser to notice improvements, the only time you should be concerned about “clutter” is if it is damaging to the dwelling.

The Key Components Addressed In An Appraisal

1. The Site: Location, view, topography, lot size, utilities, zoning, external factors, highest and best use, landscaping features.
2. Design: Quality of construction, finish work, fixed appliances and any defining features.
3. Condition: Age, deterioration, renovations, upgrades, added features.
4. Health & Safety: Structural integrity, code compliance.
5. Size: Above grade and below grade improvements.
6. Neighborhood: Is the property conforming to the neighborhood?
7. Functional Utility: Is the property functional as built – style and use?
8. Parking: Garages, Carports, Shops, etc..
9. Other: Curb appeal, lot size, & conforming to the neighborhood are obvious to the appraiser when they drive down into the neighborhood pull up in front of your home.

Keep in mind that when an appraiser enters your home, they are going to look at the overall design, condition, finish work, upgrades, any defining features, functional utility, square footage, number of rooms and health and safety items. Be sure to have all carbon monoxide and smoke detectors in working condition. Since the appraisal provides half the weight in any credit decision involving the security of real estate, the appraisal should be done by a qualified, licensed appraiser whom is familiar with your neighborhood, and the type of home you are buying, selling or refinancing.

If you’re interested in what specifically appraisers are looking for, here is a copy of the blank 1040 URAR form that is used by every appraiser in the country.

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Related Appraisal Articles:

• Mortgage 101 – Appraisal Basics
• Five Myths About Home Values
• Understanding The Difference Between An Appraisal vs Neighborhood Comp
• How Do Mortgage Companies Value A Property That Hasn’t Been Built Yet?

Common sense will tell you that the nicer your home looks, the better your chances of selling at or close to the asking price. However, don’t go overboard and practically remodel the entire house before listing the property. Not only will a project of this scope cost you plenty, but you probably won’t recoup even half of your fix-up expenses.

Cosmetic upgrading and repair however should always be secondary to plumbing, heating/cooling and electrical repair. Roofing and structural repairs are an absolute must as well.

Certain upgrades and repairs designed to improve the property’s “eye appeal” include:

• A fresh coat of paint, inside and out, is a most effective way of making the home look newer and more inviting. Neutral colors such as beige or off-white seem to work best.
• If the interior of the home has wallpaper in some or all of the rooms, particularly if it has a worn look, strip it off and paint. Replacing the wallpaper with another design of your choice may not appeal to a prospective buyer, and could actually negatively influence a buyer’s decision.
• If any of the rooms are carpeted, and the carpeting shows signs of wear or discoloration, replace it. Use neutral colors, and medium shades, not too light or too dark. Carpeting and painting are cost effective ways of sprucing up the home’s environment, and can help increase the price tag by much more than the cost of material and installation.
• If the floors are hardwood, refinish if necessary.
• Replace chipped or cracked tiles. It is equally important to repair or replace grouting. If the grouting is in good shape, be sure it has been scrubbed clean.
• If you have Formica counter tops that are showing signs of wear, replace them with a do-it-yourself  kit, available at hardware stores, or if you are not inclined to tackle the job, which can be somewhat tricky, hire a competent handy man.
• The appearance of the kitchen can be a huge influence on the overall impression of the home, and is the most important part of the house to revitalize, if needed.

Although kitchen remodeling can most often return 100% of investment, it can cost a ton of money. However many kitchens can look their best by a simple resurfacing of the cabinets, if needed, and perhaps the installation of a new sink and fixtures.

• Replace or refurbish exterior siding.
• Examine and repair/replace window and door caulking.
• Replace doorknobs and locks if worn looking.
• Repair, refurbish or replace the front door if necessary.
• Fix or paint fences and backyard walls.
• Replace any old, outdated kitchen and laundry room appliances

Include a home warranty package as a “throw-in” if the home is ten years old or more. It’s a nice gesture to offer a prospective buyer a “piece of mind” package, and will go a long way toward establishing amicable negotiations.

If you have any other questions about getting your Las Vegas Home ready to sell, feel fee to give us a call at 702.376.0088.