Utah Real Estate Survival Guide

Helping You Navigate Our Local Real Estate Market

VA Appraisals and the “Reasonable Person” Theory

I have always been under the impression that the utilities must be on and the furnace, water heater, etc must be in operating condition when a VA appraiser appraises a home. Apparently, that isn’t the case. It is true for FHA appraisals, but not VA.

This morning, I received a telephone call from a VA appraiser to schedule an appointment to get in to one of my (approved) short sale listings. I told him that the home was vacant, but that the seller had made arrangements with the utility companies to have utilities all on the previous week, for the buyer’s home inspection and appraisal – with the lender’s coordination. As of now, except for the electricity, the utilities have been shut off again.

The appraiser informed me (much to my relief) that VA did not require that the utilities be on – only FHA appraisals have that condition. For VA, the appraisers operate under the “reasonable person” theory. The theory that a reasonable person, and prudent home buyer, would have a professional inspection to determine if the furnace, water heater, plumbing, etc were in proper working order.

I have tried, unsuccessfully, to find the VA documentation to confirm this. What is interesting is that I cannot locate anything that says that the utilities MUST be on, either. In search of a definitive answer, I’ve posted the question on the Appraisal Institute’s Facebook Page and also joined the Appraisers Forum.

Follow up to be posted. If you know the answer to this question, please post!

Research Documents:
VA Appraiser’s Handbook
VA Pamphlet 26-7 Revised: Lender’s Handbook
VA Pamphlet 26-7 Revised Chapter 12: Minimum Property Requirements (MPR)

Key Bank Introduces New 100% Loan Product

I’m looking forward to a luncheon at Key Bank on Thursday, December 16th, as they introduce their new 100% financing loan product. .25% rate add, no mortgage insurance, 620 FICO score with no lates in past 12 months, income cap at $51,000. No first time homebuyer restrictions.

Hope this provides some of my clients with an option for financing that they wouldn’t otherwise have.

This is a conventional program that seems to offer a borrower more flexible guidelines to meet than Utah Housing, or even the standard FHA loan. Debt ratio not to exceed 42%. There is a minimum borrower’s investment of $500, which could be in the form of the buyer’s earnest money deposit.

Follow up to be posted.

Refi and Rent Out to Buy New? What Not to Do …

Buying a new home and renting out the old one Realty Q&A – MarketWatch. Written By: Lew Sichelman. The author and nationally syndicated columnist is also a contributor to RealtyTimes® and HouseLogic … the latter being a subsidiary of the National Association of Realtors®.

Did Mr Sichelman really write and recommend the following strategy?

“… But the only way you can pull $50,000 out of your present abode is to refinance. And to do that, you’ll have to certify that you will occupy the place. So don’t let anyone in on your plan, especially your loan officer. And don’t buy your next house until the you have the money from the refi in hand.”

Yes, this is loan fraud. Excerpt from HUD’s website page “Don’t be a victim of loan fraud”: Be honest about your intention to occupy the house. Stating that you plan to live there when, in fact, you are not (because you intend to rent the house to someone else or fix it up and resell it) violates federal law and is a crime.

wow

Thanks for reading – hope you’ll share.

Your Realtor®,
Kim Novak, RE/MAX Masters
kimnovak@remax.net
(801) 726-1443

Are Senior or “55+” Restricted Communities Legal?

I had a sign call on one of my listings yesterday. This particular home is located in Cozy Dale Retreat, and, as the subdivision name would imply, an adults-only community. One member of the household (who also must be an owner of record) has to be at least 55 years old.

In talking with this potential buyer, she told me that she had a 28 year old son who had just had a kidney transplant and that he would be living with them. When I told her that it was prohibited in this particular community, she pulled out the “familial status” card.

Point #1: Excerpt from the Fair Housing Act, Sec. 802. [42 U.S.C. 3602] Definitions

(k) “Familial status” means one or more individuals (who have not attained the age of 18 years) being domiciled with–

(1) a parent or another person having legal custody of such individual or individuals; or
(2) the designee of such parent or other person having such custody, with the written permission of such parent or other person.

The protections afforded against discrimination on the basis of familial status shall apply to any person who is pregnant or is in the process of securing legal custody of any individual who has not attained the age of 18 years.

With her voice increasing an octave or two, she proceeded to tell me that it was also “age discrimination” and that it is illegal.

Point #2: Excerpt from the Fair Housing Act, Sec. 807. [42 U.S.C. 3607] Religious organization or private club exemption

(1) Nothing in this title limits the applicability of any reasonable local, State, or Federal restrictions regarding the maximum number of occupants permitted to occupy a dwelling. Nor does any provision in this title regarding familial status apply with respect to housing for older persons.
(2) As used in this section “housing for older persons” means housing —

(A) provided under any State or Federal program that the Secretary determines is specifically designed and operated to assist elderly persons (as defined in the State or Federal program); or
(B) intended for, and solely occupied by, persons 62 years of age or older; or

(C) intended and operated for occupancy by persons 55 years of age or older, and–

(i) at least 80 percent of the occupied units are occupied by at least one person who is 55 years of age or older;
(ii) the housing facility or community publishes and adheres to policies and procedures that demonstrate the intent required under this subparagraph; and

(iii) the housing facility or community complies with rules issued by the Secretary for verification of occupancy, which shall–

(I) provide for verification by reliable surveys and affidavits; and
(II) include examples of the types of policies and procedures relevant to a determination of compliance with the requirement of clause (ii). Such surveys and affidavits shall be admissible in administrative and judicial proceedings for the purposes of such verification.

And finally, she told me that she was fighting with two other home owner associations because the age restriction was discrimination and “illegal”. It was at this point that, rather than continuing to try to educate (and debate with) her, that I told her that there was a legal procedure to create an age restrictive subdivision in Utah and, if the community wasn’t created properly, then their age discrimination could potentially be illegal, but that this was not the case at Cozy Dale Retreat. This resulted in a fairly unceremonious “click” on the other end of the phone.

Point #3: Housing for Older Persons Act of 1995 (HOPA) excerpt:

The Housing for Older Persons Act (HOPA), signed into law by President Clinton on December 28, 1995, amended the housing for older persons exemption against familial status discrimination. The HOPA modified the statutory definition of housing for older persons as housing intended and operated for occupancy by at least one person 55 years of age or older per unit. It eliminated the requirement that housing for older persons have significant services and facilities specifically designed for its elderly residents. It required that facilities or communities claiming the exemption establish age verification procedures. It established a good faith reliance defense or exemption against monetary damages for persons who illegally act in good faith to exclude children based on a legitimate belief that the housing facility or community was entitled to the exemption.

Thanks for reading – hope you’ll share.

Your SRES® Senior Real Estate Specialist,
Kim Novak, RE/MAX Masters
kimnovak@remax.net
(801) 726-1443

Get a Realtor “Free Market Valuation” Before Investing $450 in a Refinance Appraisal

I am in the process of refinancing my personal home, so, being the consummate Realtor® that I am, I prudently prepared a market valuation for myself. I have to admit, I was scared. Yes, very scared. Intuitively I knew what the value should be (since I help my clients buy and sell homes in the same area every day), but I bought in May 2007, at the peak of the peak. I also knew that my neighborhood had suffered a recessionary decline in home values, along with everyone else.

So, you can imagine the weight that was lifted when my CMA (comparative market analysis) produced the results shown in the graph below. The appraisal came in at exactly the same value as my market valuation. And I’m able to proceed with my refinance.

If you’re considering refinancing, contact your Realtor® and ask him/her to prepare a “CMA” for you. It’s what we do, for free, for our past – present – future clients. And if you don’t have a Realtor® you rely on for Utah real estate market information, I’d be honored to help you. Click Here for your free market valuation.

Thanks for reading – hope you’ll share

How to Buy in Today’s Buyer’s Market

Buy like you’ll have to sell tomorrow.
Avoid buying someone else’s mess.
Buy with the future in mind.

1. Buy like you’ll have to sell tomorrow … the formula is pretty straight forward.

Part One: The cost of selling a home in today’s market is approximately 10.5% of the sales price. 6% real estate commission, .75% title fees, .75% tax proration and 3% seller assistance with the buyer’s closing costs.

Part Two: The effect of the previous quarter’s appreciation or decline in market value, based on comparable homes in the neighborhood.

Example: If the market value of similar homes in the neighborhood declined 2% in the previous quarter, you would ideally want to negotiate an ultimate sales price 12.5% under the CMA (comparative market analysis) prepared by your Realtor®. On a home where the CMA = $200,000, goal would be to purchase at $175,000 plus whatever you are asking the seller to pay for YOUR closing costs.

Note that I did not refer to “list” price. The homes that are selling today are already priced below the median price of comparable homes actively listed.

2. Avoid buying someone else’s mess … the stains on the carpet are only the tip of the iceberg

I always tell my clients that what happens at the front door sets the tone for what to expect in the rest of the house. Even the “banks” have figured out that they simply cannot sell foreclosed properties as-is. That’s why the vast majority of Fannie Mae and Freddie Mac/Homesteps owned homes aren’t put back on the market until they have 1) fresh two or three tone paint 2) new floor coverings and 3) new appliances.

Homebuyer’s Tip: Budget for three times the amount that you think you will need to get a “fixer upper” to the stage that you would be proud to live in. Trust me, you will discover hidden (expensive) defects in a home that has been, on the surface, neglected. There are very, very few “fixer uppers” that need only “cosmetic” repairs.

3. Buy with the future in mind … never say never

Yes, you will move again. Or, at least, prudence would dictate that you plan for the day that you may want to or need to. Here is a checklist of features and amenities that cannot be “repaired”, but matter for resale:

~ location, location, location
~ situs = view, exposure, street type, lot size
~ schools (even if you don’t have kids)
~ master bath – double sinks, private water closet
~ bedroom level laundry
~ square footage (size matters)

JMHO

Recovery? (via East Layton Real Estate News)

Recovery? This is one of the most basic home sales graphs but it really shows a great example of supply vs demand and how it affects price (when demand goes up so does price as inventory decreases). Look specifically at the 3rd 2009, as the number sold almost met the number listed prices roared up. When the market saw an increase in prices, everyone jumped to list their homes. Inventory went up and prices went back down. We are back down to what we were tw … Read More

via East Layton Real Estate News

Layton Real Estate Sales Snapshot 2009 vs 2010

October 2010 vs 2009: total number of homes sold in Layton down 32%, but price per square foot only down 7.5% … somewhat of a silver lining in the continuing storm cloud. November’s numbers are trending downward, however.
SalesPerMonth Report Explanation
This report shows sold property data for the search criteria in each month for the selected years back.
This is a description for each column header
Month – month for data
Count – numbers of homes sold for the month
Volume – total of sales prices
Med/avg OL – Original List Price – Original price based on CDOM
Med/avg Sold Price – Sale price (not adjusted for concessions)
Ratio of Med/avg SP to Original Price – Ratio as percent
Median/Avg Sq footage – total square footage
Median/Avg Price/sq. foot – Sale price per sq. footage
Median/Avg Beds – calculated using total beds
Median/Avg Baths – calculated using total baths
Median/Avg CDOM – Cumulative Days on Market

FHA/VA Rates Jump Today

For over a month, FHA and VA 30-year fixed mortgage rates have steadfastly held at 4%. Today, those rates jumped to 4.25%, most likely as fall out over the Fed’s $600 Billion Monetary Stimulus Plan initiated the day after the mid-term elections on Nov 2nd.

As a VA buyer who purchased my first home back in the early ’80’s when the “discounted” VA rate was 12%, and getting ready to refinance my current VA loan at at a 3% 5/1 ARM, I believe that a 4.25% 30-year fixed rate is still kinda sorta really good 🙂

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