FHA Repair Do’s & Don’ts

If you have Sellers who are willing to accept FHA financing from Buyers, make sure you/they understand these two words…professional and workmanlike. The reason being, HUD requires that all repairs for FHA insured loans be completed in a professional and workmanlike manner. If they are not, the financing may be denied.

Now, I understand that most Sellers aren’t thrilled about making repairs to a house they plan on selling.  Some Sellers figure if they do the bare minimum repairs everything will be fine.  However, if the repairs are not completed in a professional and workmanlike manner the deal could fall through. Here’s a real life example of how not to complete required FHA repairs. In this case, the FHA guidelines required that the exterior of all of the windows be scraped, prepped and painted.  The Seller (who balked at the idea) came up with his own solution.  

The Coyle Group - Bad Paint Job 6 - Philadephia Appraiser    The Coyle Group - Bad Paint Job 5 - Philadephia Appraiser     The Coyle Group - Bad Paint Job 4 - Philadephia Appraiser   The Coyle Group - Bad Paint Job 3 - Philadephia Appraiser    The Coyle Group - Bad Paint Job 2 - Philadephia Appraiser    The Coyle Group - Bad Paint Job 1 - Philadelphia Appraiser

Well, needless to say this didn’t pass the professional and workmanlike standards of  HUD.  The appraiser deemed the repairs unsatisfactory.  As a result, the Seller had two options, make the repairs or lose the deal.  As you can imagine, his paint job didn’t exactly add value or make his house more attractive to a new Buyer.  Eventually, the Seller decided to make the proper repairs.  He hired a professional painter (at his own expense, over $4,000) to complete the job in a professional and workmanlike manner.  The repairs were then deemed satisfactory.

Bottom line, when it comes to FHA repairs it pays to do them correctly the first time.  If a repair requirement is unclear, reach out to the lender or appraiser for clarification.  Doing so can save time, money and the sale.

If you are working with a Seller and would like to address potential FHA repairs prior to listing, please contact our office.  We have a service available to homeowners and agents where one of our professional, certified and FHA Approved appraisers will visit your property and work with you to identify potential FHA issues.


The Coyle Group’s team of Philadelphia appraisers is a leading provider of appraisals for Estate/Probate, Divorce, Bankruptcy, Tax Appeal and Pre-Listing appraisals in the greater Philadelphia Metro Area.  If you need a guest speaker at your next sales meeting, please give us a call.  We would welcome to opportunity to speak to your group and field any appraisal related questions you may have.  For more information please visit our website at www.TheCoyleGroupLLC.com  You can also contact The Coyle Group at 215-836-5500 or appraisals@coyleappraisals.com


What Happend to the Spring Market?

In a post earlier this year I interviewed four of the top real estate agents in the Greater Philadelphia Metro area about their thoughts on the market. All four felt that inventory, namely the lack of, was going to be the biggest factor in the market going forward…and I totally agreed with them.

Well, here it is half way through 2014 and I’m seeing some odd trends. Take a look at the numbers below that were taken right from the TrendMLS.  Thank you, TReND MLS for publishing this great info.

The Coyle Group - Philadelphia Stats - Appraiser

The Coyle Group - Bucks Stats - Appraiser   The Coyle Group - Chester Stats - Appraiser   The Coyle Group - Montgomery Stats - Appraiser

In Philadelphia and the surrounding “collar” counties (Bucks, Chester, Delaware and Montgomery) all of the inventory levels increased over the 2013 levels.  Adding to that, the data indicates that settled sales are flat or down compared to last year.  In fact, Philly, Bucks and Delaware counties are showing signs of over-supply (7 months of inventory being the lower end of what many in the industry would classify as an over-supply).

What?! The inventory levels were supposed to be low. It was a Buyer’s market, no one was selling. Buyers were chomping at the bit to jump on any listing that popped up. There were going to be bidding wars and homes selling for thousands over asking price. What happened?!?!   (Now, I know there are agents out there who are having a fabulous Spring and Summer.  I’m just pointing out that the numbers suggest a different trend.)

Well, I honestly think it was the brutal winter we had. It forced Buyers to the sideline and effectively killed the Spring Selling Season. Essentially, the Spring Selling Season never happened and inventory began to pile up as Buyers went into Summer-mode.  Now, typically we will see a bump in Buyer activity once Summer is over and school starts, again.

Hopefully, that will be the case this year, too. What are your thoughts on how the 2014 market is playing out?


The Coyle Group’s team of Philadelphia appraisers is a leading provider of appraisals for Estate/Probate, Divorce, Bankruptcy, Tax Appeal and Pre-Listing appraisals.  If you need a guest speaker at your next sales meeting, please give us a call.  We would welcome to opportunity to speak to your group and field any appraisal related questions you may have.  For more information please visit our website at www.TheCoyleGroupLLC.com  You can also contact The Coyle Group at 215-836-5500 or appraisals@coyleappraisals.com


What is an Absorption Rate?

The Absorption Rate measures the relationship between a real estate market’s supply and demand.  The total number of available homes (inventory = listings and pending sales) is divided by the total number of homes sold in the previous month.   The resulting number represents the number of months it would take, at that same pace, to sell the entire inventory of homes.  It this does not take into count the number of houses which will eventually come on the market in addition to those already for sale.

Knowing your area’s Absorption Rate (AR), can help you track trends.  Understanding your market and where it is headed is very important for both sellers and buyers.  It allows buyers and sellers to understand better why some homes may sell faster than other and to develop effective pricing strategies.

Calculating an AR is not difficult but you will need access to the following information:

  • How many listings are currently on the market in a given area? Be sure to include both active and pending homes.
  • How many homes sold last month?

Once you have those numbers, you will need to:

  • Add the number of Active/Pending Listings together
  • Multiply the number of homes Sold Last Month by 12.  Then, divide that number by 52 for the weekly number of homes sold.
  • Then, divide the number of Active by the number of sold per week
  • This will give you the weekly AR.  For a monthly AR simply divide the weekly AR by 4.

Here’s an example for Montgomery County.  In November 2011 there were 554 settled sales.  Currently, there are 4,481 active listings and 230 pending sales.

Listings + Pendings = Actives

4481 + 230 = 4711

Homes Sold  X 12 = Annualized Sales

554 X 12 = 6,648/52 = 127.85 Week

4711 / 127.85 = 36.84 Weeks

36.84 Weeks / 4 Weeks per month = 9.21 months of inventory

The result is an Absorption Rate of 9.21 Months.  What this really means is that it will take 9.21 months for the market, at the current rate, to absorb the current inventory of homes.  This assumes that no new homes will be added to the existing inventory.

One good thing about absorption rates is that they can be tailored to specific neighborhoods and price ranges. So how can an absorption rate study assist buyers and sellers?

Narrowing an absorption rate study to a certain type of home, in a specific neighborhood, at a particular price point, enables a buyer or seller to first determine the nature of their local market (is it a buyer or sellers market) and then establish a listing or offer price, accordingly.

For instance, in Lower Merion, the overall AR for the township is 8 months.  However, if we take a look at the luxury market within Lower Merion (homes over $2MM) we see a very different picture begins to appear.  The luxury market currently has a 44 month inventory.  Meaning if you have a luxury home in Lower Merion, it could take over 3.6 years for you to sell it.  This could be a problem for someone who needs to sell quickly.  In this case, having the AR could prompt the seller to rethink their asking price.

Once we know the AR, we can determine what kind of market we are in.  That information can then be used by sellers to price their homes more effectively and hopefully reduce days on market.  For buyers, this information can help you determine if you are in a Buyers or Sellers Market and to structure your offer, accordingly.

Buyer’s Market: Over 7 months of supply
Balanced Market: 5 to 7 months of supply
Seller’s Market: Less than 5 months of supply

The AR is not the only thing you will need to determine a market’s condition.  Specific property features, condition, location and of course price will typically be more important in determining how fast a property will actually sell than any statistical formula.

If you have any questions about Absorption Rates or need assistance calculating the AR for a specific market or property type please feel free to contact us through this blog or email us at appraisals@coyleappraisals.com


The Importance of Listing Appraisals

Last week temperatures in the Philadelphia area flirted with 70 degrees.  Spring fever was definitely in the air.  People were out and about; and for a day or two everyone forgot that it was still February.  It got me thinking about the upcoming Spring Selling Season. 

Traditionally, Spring is when the Philadelphia real estate markets start to shake off the Winter sluggishness and things start to pick up again.  However, I can’t help but think this year may be different.  Given accumulating inventories, high unemployment, impending inflation and the lack of a tax credit, the 2011 Spring Selling Season could be a challenge.  Sellers and Agents alike will need to rethink their marketing strategies and pricing in order to be competitive enough to attract Buyers.

Pricing will be the key this Spring. 

For Agents, this year more that ever it will be important to make sure listings are priced to compete.  Not only will you have to compete with the older listings that are out there, you will have to go up against fresh, new listings that will be priced to move.  If you haven’t thought about getting a Listing Appraisal, now is the time to act. 

More and more, Agents and Sellers are having Listing Appraisals completed to aide their decisions about pricing and marketing strategies.  They realize that in this market not only do you have to price a house to sell, you have to price it so that it will appraise, as well.  Other Agents (your competition) are getting Listing Appraisals.  Frankly, if you are relying on the same old CMA these days, it’s like bringing a knife to a gunfight. 

Aside from helping to price a house properly, there are several benefits to having a Listing Appraisal done:

  • Demonstrates to the Seller that the Agent is committed marketing the house effectively
  • Sets realistic expectations for Seller
  • Provides Seller with an unbiased opinion of how their home compares to others on the market
  • Helps maximize the asking price without overpricing or under-pricing
  • Can help identify potential problems, repairs or issues present at the house that may cause delays or make the sale fall through
  • Gives the Agent/Seller an indication of how a potential Buyer’s appraiser may view the property which could have an affect on the Buyer’s ability to obtain financing
  • Can help reduce days on market, resulting in higher selling prices and possibly eliminate unnecessary negotiations 
  • Saves time, money and effort

Selling a home can be a very emotional process.  Perhaps the most important benefit of a having a Listing Appraisal completed is that it allows Agents to maintain client relationships without having to be the bearer of bad news.  The Appraiser is the one to present any unpleasant or “bad” news to the Seller.  The Agent is there to aide the Seller with interpreting the news and devising a strategy to sell their home. 

Listing Appraisals can also provide some level of defense against issues arising from the HVCC Guidelines; namely, appraisers who are unfamiliar with your market, inexperienced appraisers and appraiser who may not have access to the best data for your market.  The Listing Appraisal will provide a benchmark against which any subsequent appraisals can be measured. 

So, as the Spring Selling Season begins to heat up, it is time to invest in your own success and that of your Sellers.  Get a Listing Appraisal from a Certified Real Estate Appraiser.  For $300-$450 depending on the size and complexity of the property being appraised, Agents and Sellers can get a solid understanding of the value of a property and use that information as a tool to develop the best pricing strategy possible for the property. 

For more information on Listing Appraisals please contact The Coyle Group at 215.836.5500.


Mount Airy Trends

Being located in Erdenheim, just outside the city limits, we are frequently asked to appraise properties in northwestern Philadelphia, especially Chestnut Hill, Mount Airy, Roxborough and Manayunk. 

The other day we received our first question for the Ask PAB! section of the site.  It was submitted by a local agent who works primarily in the northwest section of Philly.  She typically deals with entry level and first time buyers.  For that segment of the market, Mount Airy offers a great selection of housing options for her clientele, in a wide range of price points and design styles.   It has very appealing housing stock, access to transportation, shopping, proximity to Center City and the suburbs and very unique community atmosphere.  Her question was simply:

 “How have Mt. Airy twins and rows been performing over the past couple of years?”

Below is a chart of the sales of 3-4 bedroom twins and rowhomes in Mt. Airy from January 2008 through December 2010.  Click on the chart to enlarge.

The blue dots indicate the sales of 3 bedroom homes; the red dots represent the 4 bedroom sales.  Our sample produced 341 sales of 3 bedrooms and 105 sales of 4 Bedroom homes, in Mt. Airy, during that time period.  The green and yellow lines depict the linear sale price trends for 3 and 4 bedroom houses, respectively.

The trend lines indicate that both 3 and 4 bedroom homes are moving downward.  However, it appears as though the 4 bedroom properties are experiencing a deeper shift that the 3 bedrooms, which are riding a flatter trend.  This is likely due to the fact that there are fewer 4 bedrooms homes and, as a result, fewer 4 bedroom sales.  With a smaller sample, it is easier for a few sales to influence the trend.  Conversely, with a greater number of samples it is less likely that a handful of sales to move the trend so dramatically.

If you have a question about real estate markets and trends in the Philadelphia region, please visit our Ask PAB! page to submit your inquiry.


FHA Protocols

The FHA has a number of appraisal inspection protocols which must be followed by FHA Appraisers.  Agents and Sellers should be aware of these inspection protocols as they may affect the appraisal and upset settlement timelines.  These protocols are intended to assure a level of due diligence that must be performed by the appraiser in order to property assess whether or not a property meets the Minimum Property Standards set forth by HUD/FHA.

The Head & Shoulders Test – this standard simply means that when inspecting attics, basements and crawl spaces an FHA appraiser must enter the space to “head and shoulders” level, at a minimum, to allow for a proper visual inspection. 

Mechanicals & Plumbing – all of the homes mechanical systems and plumbing must be turned on and available to be tested by the appraiser.  A representative sampling of switches, outlets and fixtures must be tested.  The heater must be operational.  If temperatures permit, cooling systems must be tested.  Water pressure and temperature should also be tested.

If for some reason, the appraiser cannot access any of these spaces or complete any of the necessary system tests, the appraiser must contact the lender and reschedule another inspection of the property at such a time that property access can be made.

This is where Agents and Sellers have to be proactive.  Make sure that these areas are readily and safely accessible to the appraiser.  Have a ladder ready for the attic inspection if there are no drop stairs.  Clear the access to the crawl space and have a light available to light up those dark corners.  Remove any personal property that could block these areas from access and view.  Make sure that all of the utilities are turned on and are ready to be tested.

These simple steps will save time and money.  The FHA appraisal process will move more quickly without having to schedule unnecessary reinspection appointments; and the appraiser won’t have to charge a re-inspection fee.


The Lanesborough

Purchase Decision – The Lanesborough, Rittenhouse Square, Philadelphia

This was an interesting appraisal assignment. We were contacted by a perspective Buyer to help determine whether or not he was going to purchase the condo unit that he was currently renting. The unit was located on one of the upper floors in the landmark Lanesborough Building in the Rittenhouse Square section, of Philadelphia.

The Lanesborourgh is a luxury residential condo conversion of a classic 1929 building. It is a very exclusive building with direct elevator access into each unit and only one unit per floor. Units are valued in the millions of dollars.  Personally, I think that it is one of the most elegant buildings in the Rittenhouse Square market.

Due to the limited number of units in the building, there were no recent sales to analyze. The most recent sales in the building were between 16 and 24 months old. But there were two listings in the building.

In developing our appraisal, we looked at current market sales and listings within the immediate Rittenhouse Square market. We focused our search for comparables to included units with similar square footage and amenities, as well as intangibles such as building prestige.

What we were able to find was that there was a market for a unit like the subject. We also found two current comparables from competing buildings that sold previously, in-and-around the same time as the most recent Lanesborough sales. This allowed us to see how the Lanesborough sales competed with comparable market sales, in Philly, at that time. By looking at the relationship of the prior Lanesborough values to the comparables back then, we were able to draw correlations and projections to the current values. The listings in the subject building and competing buildings also gave us indications as to the market trends over recent years.

In the end, we were able to present our client with a well researched appraisal that aided in his decision whether or not ownership in the prestigious Philadelphia building was right for him.