Copy for Real Estate Guide Column for 5-28-10

REAL ESTATE PATTERNS
By Ken DuVall

LOW HOME APPRAISALS

A low appraisal can kill a home sale. It's one of the reasons that transactions fall apart these days. In a normal market, when an appraisal is lower than expected, it's up to the buyer and seller to cooperate, whether that means the buyer needs to put more cash into the deal or the seller needs to lower the price. Many sellers are selling for close to what they owe so there's not a lot of leeway. It can have a deal-killing impact, more than in years past when there was more wiggle room.

Current conditions in many markets also make an appraiser's job more challenging. For one, fewer home sales mean they have fewer comparable sales to consider when estimating market value. Also, sales that involve short sale properties will have a lower price than traditional sales. Short sales are when a borrower owes more on a home than it's currently worth, and the lender agrees to take less for the property than the loan balance.

Also, home prices in some areas are starting to stabilize or rise, while other areas are still struggling, so appraisers have to be very aware of local conditions. Plus there’s a new law that affects appraisers too, the Home Valuation Code of Conduct, which affects certain loans. The market now, unlike 2 or 3 years ago, is fluctuating, and difficult for them to read.

All of which is to say that today’s job of an appraiser is difficult, and they can simply make mistakes in estimating the value of a home. I feel sorry for them. It’s tough these days. When they're honestly faulty, consumers have the right to appeal.

Whether you're buying a home or refinancing a mortgage, read the appraisal. Make sure the appraiser made no mistakes that led to a low valuation. The document should stand on its own and largely speak to an appropriate estimate of value. Also, the lender should be able to talk you through it to ensure you understand it fully.

Don't be afraid to ask questions. It is an opinion of value, and I underscore 'opinion.' What you are getting is an appraiser's compilation of data and their interpretation of that data. It is not cast in stone. You pay for it. You’re entitled to a copy. Make sure all the facts about your home are correct. Also look for omissions, such as a recent addition or significant improvement that may have increased its value.

Make sure the comparable sales data is fair and accurate. If they use a nearby sale and you know it was a short sale or there were other motivations to sell over the typical seller, you and the appraiser should know that. Rely heavily on your REALTOR.

Be proactive. If you’re aware of a foreclosure down the street that is similar to yours, or say a divorce or relocation that would cause a sale to be low for high-pressure reasons, make the appraiser aware of that. And always request the lender use an appraiser from the same geographic area as the property being considered. But the lender isn't obligated to do that. It’s no fun at all anymore.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

Copy for Real Estate Guide Column for 5-14-10
REAL ESTATE PATTERNS
By Ken DuVall

PROPERTY TAX UPDATE

On April 23rd, I penned the column about property taxes. The ink had barely dried before I received an email from a local appraiser, gently taking me to task for much of what I had written. Most of the data therein was taken from a Wall Street Journal article with its national orientation. What follows are excerpts from an interview with Chip Meriam with the Glenn County Assessor’s Office:

Ken: “What did you find in my column that prompted your email?”

Chip: “You noted that many counties only reassess every 3 to 5 years with no incentive to move faster. As a result, more and more homeowners are appealing the valuations.

Ken: “Please set the record straight for us.”

Chip: “The trends and statistics in your column may be national averages but do not apply locally. In 1978, California voters passed Proposition 13, the main focus of which is elimination of periodic reassessments. Rather, a base year value is established when a homeowner acquires the property. Generally, the assessment cannot increase by more than 2% per year, compounded, until the property is sold again.”

Ken: “So our California properties aren’t automatically reassessed every 3 to 5 years?”

Chip: “Correct. I must note, though, that local assessors are reassessing thousands of properties now due to declines in value. These reassessments are not in response to appeals, but as a result of the assessors’ adherence to another property tax initiative, Proposition 8, which requires enrollment of the current fair market value or the Proposition 13 value, whichever is lower. The large value declines identified in your column have driven the fair market value of many homes below the 2%-per-year Proposition 13 assessment. We’ve been looking at these assessments for the past 3 years.”

Ken: “In other words, reassessments only occur when the market experiences substantial drops in value, but not when substantial increases occur?”

Chip: “That’s right, only with losses in value. What’s more, once a property is reviewed for a decline in value it will continue to be reviewed automatically every year until the values shift back the other way.”

Ken: “Then taxpayers need not hire representation as the reassessment takes place automatically?”

Chip: “This was loudly and effectively noted about 2 years ago by then Butte County Assessor, Ken Reimers. He used several venues to get the word out that local properties were already being reviewed, and without charge.”

Ken: “Chip, thank you for taking the time for this and for filling us in on the local scene. We all appreciate you chiming in here.”

In conclusion then, we’re far better off than the national picture painted in the WSJ article, and we’re fine as far as our local property tax valuations are concerned. I still learn something each and every day. So chalk one up for the good guys!

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.

Copy for Real Estate Guide Column for 5-7-10

REAL ESTATE PATTERNS
By Ken DuVall

DE JA VU ALL OVER AGAIN!

I read the “Landmarks Transplanted” article in the recent ‘American Profile’ insert in the E-R and boy, did it bring back memories. My first foray into real estate was in 1963 when a land development called Lake Havasu City on the Colorado River in Arizona started sales. That’s when I got my real estate license.

The sales force generated leads in L.A. and we would all fly down to Lake Havasu every weekend for the buyers to select lots to buy. We used ancient turboprop Lockheed Electras that rattled and rolled their way over to AZ. On take-offs, I remember stuff came rolling down the aisles under the seats from who knows what source! It was a thrill every time!

We were selling lots in the middle of the desert. The price was around $1500 a lot then. There was absolutely nothing there then, besides desert critters, but a big clubhouse to feed us and do transactions in. I found it amazing there are now some 50,000 people living there. I sold a lot I won in a sales contest several years later for $25,000! Plus a mini-TV too with a 3” screen that I have to this day. You really needed two of them so you could strap one to each eye!

Then the famous old London Bridge highlighted in the Profile article was purchased for $2.8 mil and moved to the site by the project owner of chain saw fame, Robert McCulloch. Sales and prices skyrocketed. Who would have ever imagined you could move that humungous bridge? Ten thousand tons of granite blocks were sailed across the Atlantic Ocean, through the Panama Canal and trucked from Long Beach to Havasu where it was totally rebuilt spanning the Colorado River! An amazing feat. It took 3 years to complete.

For the next 10 years I was involved in numerous other recreational developments: Tahoe Donner, a gated community at Truckee; Alta Sierra, also gated, out of Grass Valley; Klamath River Estates above Yreka; Mt. Shasta Forest 2½ acre parcels near McCloud at the very foot of Mt. Shasta. Another was the gated Bear Valley Springs project near Tehachapi which became a hit with the Hollywood elite. Acreage and extravagant homes became the place to hang out with the big guys. Nearly all the projects had golf courses.

In 1973 I ended up the So. Calif. Regional Mgr. on another project, our very own Paradise Pines, consisting of 16,000 lots which cost $3000 each then, a $48 million deal. Some of you may remember Sam Fortino, the original developer who sold out to Larwin, the big builder I was employed by. We did exactly the same thing except the airplanes were now 100 passenger charter jets. There was the obligatory clubhouse there then too. But at least there were trees! We flew a flight in every Saturday and Sunday.

After spending 3 years of weekends in beautiful Chico, Paradise Pines was sold out. My wife and I decided to move here from Hollywood with our then 12-year old son in 1977. You know the rest of the story. We’ve lived happily ever after. It’s been nothing but the good life since.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.