FHA Appraisal Tips

According to a recent October 2017 HUD publication, nearly 60,000 single-family mortgages totaling over $13 billion dollars were FHA endorsed in Alaska, Idaho, Oregon and Washington over the past year; I have yet to find out the number of FHA mortgages for San Juan and Skagit counties.  I do know it is an attractive program, with significant benefits, that offers less stringent criteria for down payments and credit scores that can be very attractive to first-time and many other homebuyers.

Current FHA requirements are not as stringent as they once were.  Things like a lack of a crawlspace vapor barrier or specific stair rail measurements are no longer a standard requirement for repair.  MPRs (Minimum Property Requirements) still exist and the three primary categories that an appraiser looks at are safety, soundness, and security. Safety items relate to the health, sanitary condition and habitability of the property.  Common types of problems include malfunctioning electrical service or even missing or failing hand rails on stairs and decks.  Chipping or peeling paint can also be a safety concern because it can be ingested and is poisonous.  This is especially important because lead based paint was commonly used on homes built prior in 1978 and prior.  If you are interested in the exact requirements you can log on to the official HUD website at https://www.hud.gov/program_offices/housing/sfh/handbook_4000-1

This short blog article is to provide some helpful tips to Realtors and sellers when their listings sell with this common form of financing.  By making sure that the home is ready for the appraisal inspection, the entire loan process can run smoother and additional costly trips for repair inspections can be avoided if HUD requirements are met in advance.

  1. Electricity must be on for the appraiser to verify operation of the HVAC system, appliances, and the electrical system.
  2. Plumbing must be operational so the appraiser can look for leaks, flush toilets, and check water pressure. Make sure the water is ON before the appraiser inspects!
  3. Attic access (when present) must be readily accessible and provided to check for insulation, attic ventilation, and any damage.
  4. Crawlspace access (when applicable) must be provided; remember appraisers do not carry power tools and typically will not remove obstacles in the way of the access point. This is required to check for standing water, possible damage, and ventilation.  Clear and open the access point in advance of the inspection.
  5. Windows must be able to be opened.  This is important for safety reasons as access to the outside is necessary for egress safety.  In addition, if security bars are present, which are very rare in San Juan and Skagit counties, they must have a quick release mechanism; if not present, they must be removed.

This is by no means a complete and comprehensive list but it includes items I have run into lately that have created delays in the closing process.  If you have any questions regarding appraisal requirements for FHA financing, please do not hesitate to contact me at (360)317-5845 or liz@allislandsappraisal.com.

In Federal fiscal year 2017 – October 1, 2016 through September 30, 2017 – the Federal Housing Administration endorsed 59,024 single-family mortgages in Alaska, Idaho, Oregon & Washington State – the seventh-highest total in the 80-plus year history of FHA – with a total dollar value of $13.1 billion.  As of September 28th there were 299,916 active FHA-insured mortgages in those four states.” November 2017 NorthwestHUDLines epublications: https://www.hud.gov/states/shared/working/r10/newsletters/hudhighlights

The Worst Appraisal Advice Home Sellers Actually Believe

The worst appraisal advice home sellers actually believe

My comment: This is a really great article written by a successful appraiser in Alabama. He discusses some very relevant information including tax assessments (which are set to come out very soon in San Juan and Skagit counties), Zillow, pre-listing appraisals, return on investment for home improvements, and using the cheapest appraiser available :/

10 things to understand about appealing your property taxes in San Juan County

November 2017: According to the San Juan County Assessor’s Office 2018 Notices of Value have been mailed out! If you live on Orcas, Lopez, Shaw, Friday Harbor or the outer islands please read my blog about appealing your property taxes. Feel free to contact me at (360)317-5845 or liz@allislandsappraisal.com. Continue reading

2017 Fee Survey Results

OREP/WRE – 2017 Fee Survey Results

My comment: 2017 appraiser fees were studied nationwide – including rural Washington state which includes all of San Juan County; Friday Harbor, Orcas, Lopez, Shaw, and Guemes in Skagit County.  92+% of rural Washington appraisers are charging over $600 for a standard 1004 URAR (single family residential) lender report, with 55% in the $600-800 range. Keep in mind some lenders use an AMC (appraisal management company) instead of hiring the appraiser directly.  Using an AMC adds to the cost of the appraisal and many of you know that your appraisal fee charged during financing is significantly more than what is indicated in this study.

Margin of error in Zillow and Redfin value estimates

For all my Zillow and Redfin loving friends. Please read! The margin of error in San Juan County is one of the largest in the state for these AVM’s to be accurate. Recently, Zillow told me my own home dropped in value by 37.5% in one month, using comparable sales from other counties (Whatcom, Lummi Island) and properties that were not even remotely similar in location, view, site or size.

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10 Things to Understand About Appealing your Property Taxes in San Juan County

1. The Date

Your assessed valuation is based on January 1st of the current year, meaning only sales from the prior year are considered relevant. Your Notice of Value, likely received in the fall, reflects the Assessor’s opinion of market value on January 1st of the current year.  For example, if you received your notice in November, 2017 the valuation date is retrospective to January 1, 2017, or approximately 11 months in the past.

2. Wait

Until you receive the Notice of Value in the mail. Wait to see how the Assessor assesses your property before deciding to appeal.  Do NOT hire anyone (including me) to help you appeal before you know what your assessed value is.  Carefully read the front and back of the notice for filing deadline information.

3. Call the Assessor’s Office

This is a free move. They are happy to answer your questions.  Be polite and respectful, inquire about the details of your property and how the details were considered and reflected in your valuation.  Try to resolve your issues, be reasonable and coherent in your discussion.  Send information to the office; email or bring in relevant information for the staff appraiser to consider.  Review the details of your property in advance online using the Assessor’s parcel search function found here, http://parcel.sanjuanco.com/PropertyAccess/?cid=0

4. My Recommendation

After considering the above three suggestions, I recommend talking with a trusted real estate professional before filing an appeal.

5. Your Wallet

Remember that every $10,000 in assessment ranges from $47-$75 out of your pocket (2017 SJCo). The levy rate varies depending on which part of the county your property is located; Orcas, San Juan, Lopez, Shaw and the outer islands all have varying and multiple levy rates. These areas are called the tax code areas, and the levy rate is based on many factors that change annually. You can review your levy rate in the Taxing Jurisdiction section of your property details found on the Assessor’s parcel search mentioned above, and find more information about levies on the Assessor’s homepage http://sanjuanco.com/149/Assessor.

6. Market Value

Understand that the assessment must, by law, reflect the market value of your property on the date indicated. This means how a typical buyer would value your property.  Understand the difference between cost to build and market sales approach; a homeowner’s (often reduced) cost to build something does not dictate the market’s reaction ($) to that feature. The opposite is also true with custom or over improved property, where the market will not pay more for a specific characteristic, feature or structure.

7. Forms

The Board of Equalization is an independent volunteer board appointed by the County Council The appeal form and information about the board, deadlines, and the members can be found at http://www.sanjuanco.com/356/Board-of-Equalization.  Read the form carefully!  Pay special attention to the area asking for your opinion of value and your sales comparable support.  Remember the burden of proof lies with you!  The Assessor has the presumption of correctness in Washington State.

8. Lowball

Don’t lowball your value. Remember the reasonable test; reflect on what the real estate professionals have shared with you.  Do your research and understand the appraisal principles being applied.

9. Comp Sales

Use comparable sales that occurred near, ideally just before, January. Support your value with specific sales as close to January 1st as possible.  Make sure your “comps” really are comparable.  Don’t just use the lowest sales in the neighborhood, use whatever is truly comparable.  Use specific market data; national or statewide trends are usually not specific enough.  Look at your neighborhood, island and the county.  Do not present information that does not correlate statistically to your specific property.

10. What Happens After You Appeal

The Board will review your application, contact you and set a hearing date. It is best if you come in person- or send a representative- to present your case.  Demonstrate the efforts taken to resolve the issues with the Assessor’s Office prior to filing.  Be polite, respectful and coherent in your presentation.  Do not expect a decision at the hearing; usually the Board of Equalization issues a written decision with 30-60 days of the hearing.  The board can raise, lower or sustain the county Assessor’s value.

Real estate lawyer sues Zillow, calls Zestimate a ‘tremendous roadblock’ to selling her home

Since its inception, Zillow’s home-value calculator, know as the “Zestimate” has been one of the most controversial features of the company’s real estate portal. Zillow co-founder Rich Barton openly admitted to GeekWire that the tool is “very provocative and personal and a little voyeuristic.” Continue reading

Home prices rising, yes, but not as fast as homeowners think

Home values continued their upward climb, however not quite as fast as homeowners estimated, according to Quicken Loans’ Home Price Perception Index.

On average, appraised home prices came in 1.77% lower than what homeowners expected, the fourth consecutive month the gap between the two opinions widened, according to the index.

Continue reading

Northwest sees new listings soar by 50%

Northwest Multiple Listing Service brokers saw an uptick in new listings during March as the housing market saw an increase of 50% from February in new listings.

The report, which covers 23 counties in and around Washington state, showed brokers added 10,321 new listings during March. Brokers also added an even greater number of pending sales, 10,447, leaving inventory near historic lows. Continue reading

Appraiser Trends Study

In recent years, the National Association of REALTORS® has heard concerns regarding a perceived shortage in appraisers. NAR is also aware of reports of long turnaround times for appraisals, higher and/or rush fees in certain areas, and difficulty in bringing new appraisers into the profession. NAR seeks research to determine whether a shortage of appraisers exists and to what extent, as well as to further explore the other issues facing the appraisal profession. (read full article on nar.realtor.com)