What To Do When Your Home Doesn’t Appraise At Its Purchase Price

Experienced home sellers in Bend know that reaching a sales agreement with a potential buyer can be just the start of the negotiation process. There are often inspection issues to resolve, among other items.

One particular negotiation point which can present difficulties for both buyers and sellers is when a home’s appraised value falls short of its contracted sales price.

Sometimes, this happens because the home’s price was inflated. Other times, it’s the result of a faulty appraisal.

As a home seller, there are some common appraisal problems of which you should be aware. Here are some of them, and how to seek remedy so that the home sale process remains smooth.

Inaccurate comparisons
An appraiser will assign your home’s value based on comparable properties and recent sale prices. However, some homes — notably those in foreclosure; sold via short sale; or which were abandoned — sell at a discount as compared to non-distressed properties. An appraiser may want to ignore these types of comparable homes, or make proper valuation adjustments.

Ignored market conditions
The housing market can improve quickly as we’ve seen in some U.S. markets since 2011. Appraisers, though, may not consider a local market’s demand and its rapidly rising prices — especially after the recent downturn from last decade. If an appraiser is not taking into account such information as multiple offer situations, low local inventory, and days on market, your home’s appraised valuation may be affected.

Slow turn-around time
Appraisers operate under strict time guidelines. When an appraisal takes more time than usual, therefore, it’s often the result of the appraiser’s uncertainty on the home’s value. This is a common scenario for unique homes for which comparable properties are scarce. It can also be the case for when an appraiser is unfamiliar with your area. If an appraisal takes an inordinate amount of time to complete, consider asking your REALTOR® to review the figures.

To err is human and appraisers make mistakes occasionally. How you handle those mistakes as a seller can be the difference between a sold home and a canceled contract.

27 Months Of Consecutive Job Growth Helping Home Prices Rise

The Bureau of Labor Statistics (BLS) Non-Farm Payrolls report for December exceeded Wall Street’s expectations by 5,000 net new jobs, showing 155,000 positions created in December.

The December tally raised the economy’s 12-month total to 1.84 million net new jobs created nationwide. Jobs added in December mark the 27th consecutive month of job growth.

Job sectors showing the strongest growth to close out 2012 included:

• Health Care
• Drinking and Eating Establishments
• Construction
• Manufacturing

Private-sector hiring is driving the jobs market, too. 168,000 new private sector jobs were added in December. Government jobs fell by thirteen thousand.

Monthly job creation has averaged +153,000 jobs since 12 months ago. It’s a fine measure of growth but economists believe it’s not enough job creation to significantly reduce the national unemployment rate. 14.4 percent of workers are categorized as under-employed.

December’s national unemployment rate was 7.8 percent, representing 4.8 million job seekers. This figure matched Wall Street’s expectations and was equal to November revised unemployment rate of 7.8 percent.

The improving jobs market and national unemployment rate make an impact on both mortgage rates and Central Oregon home prices.

Job creation suggests an expanding economy, which typically leads mortgage rates higher. In addition, with more employed persons nationwide, the potential home buyer pool grows larger, which introduces new demand to the housing market. With more demand, all things equal, home prices rise.

Job growth is one reason why home values climbed more than 5 percent in 2012, according to the Federal Home Finance Agency; and why the national housing supply would be exhausted in fewer than 5 months, at the current sales pace. Demand for homes is high and today’s low mortgage rates are extending buyer purchasing power in Oregon.

For home buyers, the expanding U.S. economy and steady job growth suggests that home prices may not rocket higher this year, but will continue to increase, little by little.

Choosing “Green Homes”

“Green” homes can be great for the environment and can save you money over time.

For environmentally-conscious homeowners wanting to minimize their footprint and their energy bills, there are four areas upon which to focus. 

In-Home Energy-Efficiency
According to the Environmental Protection Agency (EPA), as of December 2012, buildings account for 68 percent of the nation’s total energy consumption. Green homes can reduce this figure via energy-efficient appliances; well-sealed, double-glazed windows; and good insulation. Alternative energy sources such as solar panels can also reduce energy use.

Green Building Materials
Building materials are determined to be “green” based on manufacturing, shipping, and reclamation procedures, and are composed of renewable resources. Reclaimed materials such as wood from an old barn; or recovered newspapers for use in insulation are often considered to be green. Counter-tops made from recycled materials are often considered green, too. Ceramic tiles, because of how much energy is required to form them, are often not considered green unless reclaimed from a demolition project. 

Home Location And Orientation
A home for which the main living areas are facing south will be warmed by the sun in winter, and will not be overheated by the sun in summer. This is considered “green”, as is proper window placement which allows for cross-breezes which can lower energy costs on warmer days. Living in proximity to work and other frequented spots can reduce automotive energy consumption, too.

Indoor Air Quality
Good air quality means promoting a safe, toxin-free environment. Using non-toxic paints in your home plus other green materials can improve air quality. Most notably because, over time, synthetic paints and materials break down, releasing harmful particles into the air.

When buying a green home in Central Oregon , be sure to ask questions of the seller including how the home was built, which materials were used in construction, and whether the home’s appliances are Energy Star-rated.

What’s Ahead For Mortgage Rates This Week : January 7, 2013

Mortgage rates in Bend rose during the first week of 2013.

The fiscal cliff crisis was resolved prior to the market’s opening Wednesday, when legislators voted to approve a deal. While many tax cuts were extended for taxpayers earning less than $450,000 annually, other facets of the fiscal cliff issue are yet to be addressed, including budget cuts for federal government agencies.

Investors were surprised to learn that the Fed may end its third round of quantitative easing (QE3) sometimes in 2013. The FOMC meeting minutes for December 2012 suggested that Fed support for its QE3 program has waned as the economy has improved.

First-time jobless claims increased for the week ending December 29, 2012 to 372,000 from the prior week’s 350,000, worse than Wall Street’s consensus opinion of 360,000 new jobless claims.

The December 2012 Non-Farm Payrolls surpassed analyst expectations, posting 155,000 net new jobs for the month. The report also showed the national Unemployment Rate rising one-tenth of one percentage point to 7.8%. When the jobless rate falls to 6.5%, the Federal Reserve is expected to begin raising the Fed Funds Rate from its current target range near zero percent.

Overall, mortgage rates rose by as much as 0.25 percentage points last week. However, because the increase occurred wholly between Wednesday and Friday, Freddie Mac’s weekly mortgage rate survey failed to include it.

Freddie Mac reported the previous week’s average rate for a 30-year fixed rate mortgage was 3.34 percent for borrowers paying 0.7 percent discount points plus closing costs. The average rate for a 15-year fixed rate mortgage was 2.64 percent for borrowers paying 0.7 discount points plus closing costs.

As this week opens, mortgage rates are considerably higher.

This week’s scheduled economic news includes Treasury auctions on Tuesday, Wednesday and Thursday; weekly Jobless Claims report on Thursday; and not much else. There will be planned speeches, however, from five members of the Federal Reserve, including Richmond Federal Reserve President Jeffrey Lacker.

Fed President Lacker was the lone dissenting vote among voting FOMC members in each of last year’s policy votes. 

Pending Home Sales Index Cruises To Multi-Year High

Home buyers continue to push the U.S. housing market forward.

In November, for the second straight month, the Pending Home Sales Index eclipsed its benchmark reading of 100, posting a value of 106.4.

The Pending Home Sales Index (PHSI) is published monthly by the National Association of REALTORS®. It tracks homes under contract to sell, but not sold. The PHSI is relative index, comparing current contract activity to the activity of 2001 — the first year for which “pending homes” were tallied for an index.

The Pending Home Sales Index has posted an average score of 100.2 from January 2012 through November 2012, the most recent month for which there’s data. This is a significant data point because it means that the 2012 housing market is performing better than the 2001 housing market; one which is widely considered a strong one for housing.

It’s also meaningful because it foreshadows a strong market for 2013. With an increasing number of homes under contract to sell, it can be assumed that “closed units” will increase in the future, too.

The National Association of REALTORS® says that 80% of U.S. homes under contract go to closing within 60 days, and that many of the remaining homes go to closing within days 61-120.

The monthly Pending Home Sales Index, therefore, can foreshadow to today’s buyers and sellers what’s ahead for the housing market.

The Pending Home Sales Index is a forward-looking indicator.

Based on November Pending Home Sales Index, we should expect to the home resale market to remain strong, and to pick up strength, through the first quarter of 2013. Demand for homes is high, mortgage rates are low, and buyers are looking to get a good deal.

The first few months of the year are often thought to be “slow” for the housing market. This year, however, that may not be the situation. If you’re actively looking for homes in Central Oregon , the best prices may be the ones you get this winter.

Post-Fiscal Cliff, Mortgage Markets Turn Attention To Jobs Data

Mortgage rates moved higher Wednesday up congressional leaders voted to avoid the “Fiscal Cliff”.

Mortgage-backed securities (MBS) fell as investors bid up stock prices. Confidence among investors and consumers typically causes mortgage rates to rise. That’s what happened Wednesday.

For Thursday and Friday, expect jobs data to dictate where Bend mortgage rates are headed.

The Federal Reserve has said that the national Unemployment Rate will dictate future monetary policy, with the central banker planning to raise the Fed Funds Rate from its target range near zero percent once joblessness falls to 6.5%. Currently, the jobless rate is 7.7 percent.

As the jobs market improves, equity markets should follow, causing mortgage rates to — again — move higher.

Thursday’s Initial Jobless Claims report has already influenced today’s mortgage rates. New claims rose 10,000 to 372,000 for the week ending December 29, 2012. This is slightly higher than Wall Street expected and mortgage bonds are moving better on the news.

Now, Wall Street turns its attention to Friday’s Non-Farm Payrolls report. 

More commonly called “the jobs report”, Non-Farm Payrolls is a monthly publication from the Bureau of Labor Statistics, detailing the U.S. employment situation, sector-by-sector. The economy has added 4.6 million jobs since 2010 and analysts expect another 155,000 added in December 2012.

The Unemployment Rate is expected to tally 7.8%.

As more people get back to work, the nation’s collective disposable income rises, which gives a boost to the U.S. economy. Furthermore, more taxes are paid to local, state and federal governments which are often used to finance construction and development — two jobs creators in their own right.

Furthermore, as the ranks of the employed increase, so does the national pool of potential home buyers. With demand for homes high and rents rising in many U.S. cities, demand for homes is expected to grow. Home supplies are shrinking.

If you’re currently floating a mortgage rate, or wondering whether it’s a good time to buy a home, consider than an improving economy may lead mortgage rates higher; and an improving jobs market may lead home prices higher.

The market is ripe for a refinance or purchase today.

How To Make An Emergency Preparedness Kit For Your Home

Some natural disasters can be forecast — hurricanes, snow storms and, in some cases, flooding. Other disasters occur unexpectedly, such as tornadoes and earthquakes. 

As a homeowner or renter in Central Oregon , it’s a safe idea to prepare for disaster or unexpected emergency. Every home should maintain a ready, working emergency kit for such a time.

Here are some items to include in your home’s emergency kit :

• Waterproof Container : Store items in a locking, plastic container
• Battery-Powered Radio : A small radio can receive weather updates and emergency broadcasts. Pack extra batteries, or use a hand-crank radio, instead.
• Light Source : Pack multiple flashlights and many spare batteries. LED flashlights are more expensive than “older” flashlights, but won’t lose battery power as quickly. Pack candles and matches, as well.
• Water : Pack bottled water, storing larger bottles in a cool, separate place. Add several bottles of sport drink for variety, if desired.
• Food : Pack non-perishable food such as canned fruits and vegetables; protein sources such as peanut butter or canned tuna; crackers and cookies; nuts and dried fruits. Remember to pack a can-opener, if needed. Include plastic utensils, if necessary.
• Blankets : At least two blankets should be packed. Consider packing multiple sets of clothes, for different temperatures and seasons.
• First-Aid Kit : A proper first-aid kit should include antiseptic, bandages, aspirin, an ace bandage, and allergy medicine for allergic reactions.
• Emergency Contact List : Include a list of your local utility companies; phone numbers at which to contact friends and loved ones; and, your primary care physician’s number.

After packing your emergency kit, make sure to store it in an easy-to-reach location away from power lines, power sources, and any place that may be “extra dangerous” during a crisis. For example, storing an emergency kit in a garage or a shed may be safer than storing it in a basement or in a bedroom closet.

In an emergency, a little bit of preparation can go a long way. Be prepared and be safe.