FHA Guidelines (a Cheat Sheet)

The Coyle Group - HUD LogoThis is a special announcement to all of our real estate agent friends out there.  The Philadelphia Appraisers at the Coyle Group just published “The FHA Cheat Sheet”.  It was developed in response to agents, who for years, have asked us “is there a comprehensive list of FHA requirements?”  Well, it may not be comprehensive but, The Coyle Group has compiled a list of 40 of the most frequent FHA repair items and issues that face sellers, buyers and agents.  Gain some insight on how the FHA views defective paint or cracked pavement.  See what to do about broken window and graffitti…plus a whole lot more.  We’ve even include a BONUS Tip at the end!

If you are interested in receiving a PDF copy of the FHA Cheat Sheet, please send an email with your full name and email to appraisals@coyleappraisals.com be sure to put FHA in the subject line. 

For more information be sure to visit our website at www.thecoylegroupllc.com or contact us by phone at 215.836.5500

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Philadelphia Trends thru July 2012

Now that Summer is coming to an end, we can begin to take a look back to see just how the Philadelphia Single Family and Condo market fared.  Below is a chart comparing year over year activity in Philadelphia for July 2011 and July 2012.  Based strictly on the numbers, the overall Philadelphia market appears to be improving, albeit in very small increments.  On a neighborhood by neighborhood basis, the trends may differ.

Let me know if this is what you see in your markets.

Click on the chart for an enlarged view (you may have to click on it twice).

 

 * Data provided by TReND MLS

 

 

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Thousands Saved in Property Tax!

Appealing your tax assessment can be very appealing!  One homeowner that we worked with this past September found this out first hand.  He received a 43% reduction in his overall assessment.  How does that translate into actual tax savings, you might ask?  

Well, in this case the house was located in Landenberg, in southern part of Chester County.  This area has seen some pretty steep declines from the highs of 2005-2007, especially in the luxury home market.  The house was newer and was assessed at $532,770. The Assessed Market Value (AMV) of the home was $951,375.  That means that they were being taxed as if the current value of their home was equal to the AMV amount.  Their annual taxes were in the neighborhood of $16,200 (ouch!)

Our appraisal of the house and determined the actual current fair market value to be more like $545,000.  At the hearing, we were able to demonstrate that our appraised value was indeed the correct value for the property.  The Board of Assessment issued a reduction of assessment based on the appraised value. 

In the end, this particular homeowner saved $6,966 off their property taxes.  That’s a nice chunk of change!  While results like this are not the norm, it is not uncommon for property owners to save 12-25%.  Depending on their particular property tax burden the savings can really add up! 

The bottom line is…if you don’t ask you don’t receive when it comes to appealing your assessment.  It is up to the property owner to initiate the appeal and to demonstrate that the assessment is incorrect.  Homeowners: it is in your best interest to figure out if your assessment is incorrect.  Real Estate Professionals: it is in your best interest to help your past and present clients do the same.

If you have any questions about property tax appeal or other value related topic, please feel free to call us at 215-836-5500 or email at appraisals@coyleappraisals.com

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HUD REOs for only $100 Down!

In a recent article on the DSnews.com website, Carrie Bay writes about a new HUD initiative aimed at reducing their REO inventory in several markets across the US. 

I can understand the desire to reduce the inventory and get these properties into the hands of qualified homeowners.  However, the idea of possibly putting distressed properties into the hands of individuals with very little “skin in the game” is concerning.  Sure the 203K program will be able to help the owners finance repairs but, it does nothing to prepare and assist these owners with the unforeseen complications of owning an REO property.  Oftentimes, these homes have unseen issues that the typical buyer is not aware of or cannot adequately prepare for. 

While I can see that the program has good intent, I am not sure if this is a great idea.  What do you think?   Below is the full article.

HUD has approved a program aimed at putting foreclosed homes back into the hands of owner-occupant buyers.

In select states, from now into October of next year, buyers need a down payment of only $100 to purchase a HUD-owned REO home.

The buyer must be an owner-occupant, utilizing financing insured by the Federal Housing Administration (FHA). Standard FHA underwriting guidelines apply, and the sale must be for the full amount of the current list price.

The $100 down payment incentive program has been approved for two of HUD’s four national regions – the regions managed by theDenver Homeownership Center and the Atlanta Homeownership Center. HUD homes in the states listed, as well as the Caribbean are currently eligible for the program.

Denver Homeownership Center’s Jurisdiction:

  • Arkansas
  • Colorado
  • Iowa
  • Kansas
  • Louisiana
  • Missouri
  • Minnesota
  • Montana
  • Nebraska
  • New Mexico
  • North Dakota
  • Oklahoma
  • South Dakota
  • Texas
  • Wisconsin
  • Wyoming
  • Utah

Atlanta Homeownership Center’s Jurisdiction:

  • Alabama
  • Florida
  • Georgia
  • Kentucky
  • Illinois
  • Indiana
  • Mississippi
  • North Carolina
  • South Carolina
  • Tennessee
  • Caribbean

HUD’s $100 down payment incentive program can also be applied to an FHA 203k loan, which can be used to fund repairs and renovations on the home. The 203k program allows buyers to finance both the mortgage and additional money for rehabilitation needs with a single government-insured loan.

Matt Martin, CEO of Matt Martin Real Estate Management (MMREM), says this is one of the most exciting features of the new incentive program and should drive a lot of exposure to FHA’s 203k offering.

MMREM is under contract with HUD to assist with disposition sales of its repossessed homes. MMREM handles properties throughout 16 states, or about a third of HUD’s REO portfolio.

With an FHA 203k loan, “buyers can find a property that needs some TLC, fix it up however they want to, and finance the whole thing for $100,” Martin explained.

“MMREM is excited to work with this recent initiative, in a way that it supports putting HUD homes back into the hands of homeowners,” Martin said.

In addition to $100 down instead of FHA’s typical 3.5 percent down payment, HUD says it will also cover up to 3 percent of the closing costs in most cases.

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The Coyle Group in the News!

On Sunday September 11, 2011, Alan J. Heavens the real estate writer for the Philadelphia Inquirer quoted our own Michael Coyle in an article titled On the House: Weighing a Pre-Listing Appraisal.  Heavens article explores the state of the current real estate market, pre-listing appraisals and the role of appraisal management companies. 

He also interviews a colleague of ours, Wes Costello, at Annie-Mac Home Mortgage in Mount Laurel, NJ.  Wes has some very interesting insights on the relationship between lenders and appraisers and how the emergence of appraisal management companies has weakened the appraisal process and made lending an even riskier venture. 

For the full story please visit this link:  On the House: Weighing a Pre-Listing Appraisal

 

 

 

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Got UAD?

Got UAD?  If you don’t, you certainly will by September 1st, 2011. 

What is UAD you might ask?  Well, UAD stands for Uniform Appraisal Dataset.  It is the new format in which all appraisal reports will be completed if the loan is to be sold to Fannie Mae or Freddie Mac.  The UAD was developed in an effort to standardize appraisal reports and to aide the GSEs (Fannie and Freddie) in better manage their loans and risk.  Since, most loans are sold to Fannie or Freddie, and since the VA and HUD have already agreed to adopt the new UAD format, almost all mortgage appraisals completed on or after September 1st will have to comply. 

The UAD will change the way appraisals are written and make understanding the reports even more complicated for the average homeowner.  Some of the changes are fairly minor; however, 0thers are more significant.  The biggest changes are in how certain data fields are populated.  Fields like Condition, Quality of Construction, Bathroom Count, Lot Size and View will see the most change.

Condition – rather than using terms like “Average” and “Good” to describe a property’s condition there will be a rating scale of C1 – C6.  Each rating will describe a specific degree of condition.  C1 will be at the high end and C6 will be at the low end of the range.

Quality of Construction – like Condition, this field will do away with descriptors like “Stone/Frame/Good” and “Vinyl/Average”.  There will be a quality range with standardized definitions from Q1 – Q6. 

Bathroom Count – the new UAD will standardize the format in which bathroom count is shown in the report.  Before, appraisers might use 2.5 or 2F1H to describe a home with 2 full and 1 half baths.  The new format will be shown as 2.1 baths.  If a property has 3 full and 2 half baths, it will say 2.2 baths.  Not that big a change.

Lot Size – lot size and acreage will be described in whole numbers.  Rather that an appraiser using 16’X 72’ to describe a lot in an urban setting they will use 1152 (square feet).  Acres will look like this, 3.2 to describe 3.20 acres.  Anything less than an acre will be in square feet.

View – the appraiser will have to use one of a number of abbreviations or acronyms to illustrate certain view attributes. They will also have to make a determination as to whether or not the view is “N” (Neutral), “B” (Beneficial) or “A” (Adverse).  So the UAD complaint View field describing a home with a residential, golf course location may look like this “B, Res, GlfCrs”.

Below is a guide that describes the Condition and Quality rating scales, Bathroom Count and some of the new abbreviations for View as well as other fields.

This new format may be confusing at first.  If you have any questions about the UAD or appraisals, please feel free to contact one of the appraisers at our office.

Please note that the UAD will not effect the way appraisals are completed for Divorce, Tax Appeal, Estates/Probate, Pre-Listing valuation, Commercial valuation, QRPTs or for determinations of Fair Market Value.

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Bucks & Chester County Tax Appeal Deadlines Approaching

The deadline for filing a tax assessment appeal in Bucks and Chester Counties is quickly approaching.  August 1, 2011 is the final day that assessment appeals can be filed with the Assessors Office for Bucks and Chester County. 

So, if you are thinking about filing an appeal, now is the time to act.  You will need to fill out a appeal application and submit it to the assessor’s office along with the appropriate filing fee.  In Bucks and Chester Counties the filing fee for a residential property is $25.

In an assessment appeal the burden of proof is on the property owner.  If you are going to represent yourself, you will need all the documentation necessary to support your case.  You should bring pictures of your property, including any damage or detracting features.  You should have information on comparable sales in your neighborhood.  You can get this from the public records, from a real estate agent of from websites like Zillow.  However, I would not recommend Zillow since the values the site produces can be grossly inaccurate. 

Having a current appraisal of your home completed by a certified real estate appraiser specifically for the purpose of the tax appeal is probably your best alternative.  An appraisal completed for any other purpose such as a refinance could be rejected by the Board at the hearing.  The cost of the appraisal can easily be offset by the savings from a successful appeal.  Some appraisers will even attend the hearing with you (sometimes for a fee) so that they can answer any questions the Board of Assessment may have about the appraisal while hearing your case.  Remember, appraisers cannot advocate for you.  You will have to be your own advocate.  The appraiser can; however, answer questions about the appraisal done on your property.

If you elect to have someone represent you at your hearing (either a professional tax appeal firm or an attorney), they will take care of the application process, obtaining an appraisal and representing you at the appeal hearing.  In some cases, this can really work in your favor.  These professionals know the system and can advocate on your behalf.   We work with a number of tax appeal firms and would gladly provide recommendations if you need one.

If you are not sure whether or not you have a case for an appeal, please feel free to contact one of the appraisers at our office.  We will take a look at your situation and give you an indication as to whether an appeal would be worth your while. 

But hurry…time is running out!

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No Housing Recovery until 2014 Reports Appraiser News

In an email released this morning, AppraiserNews.com reported that there is mounting evidence that there will not be a housing recovery until 2014.  They cite several recent articles and surveys that have been released by noted market analysts and research companies that follow the real estate markets.

Below is the article.  When reading it and the cited studies, keep in mind that the analysis is from a national perspective.  Remember, real estate is a local topic.  What is happening nationally may not be reflective of what is happening in the local Philadelphia region.

TUESDAY, MAY 24TH, 2011

The Reports are Unanimous, The Real Estate Market Continues to Worsen

Where do we begin? AppraiserNews.com has been warning about the storm clouds on the horizon for a prolonged period and has called for measures to deal with this crisis before it deepens.

While recent reports highlight the severity of the situation, those in a position to take actions to support the residential and commercial real estate markets are doing nothing positive to address the many problems. In no particular order, here are some of the recent studies and reports that we have viewed.

On May 18th, Prashant Gopal writing for Bloomberg cited a Trulia/RealtyTrac study which showed that more than of their survey respondents (homeowners and renters) now felt that they did not expect a recovery in the housing market for at least three years. The article quotes Pete Flint, Trulias CEO, as saying that We have another 18 months until we start to see signs of price stability in the housing market. The negative impact of the shadow inventory is prominently cited in the report by Mr. Gopal who refers to both CoreLogic and RealtyTrac findings. Forecasts by Moodys Analytics and S&P/Case-Shiller findings are also discussed in this report, a link to which is found here: US Housing Market May Not Recover Until 2014: Survey

In a report by CNBCs Diana Olick on May 16th, the lack of confidence of homebuilders as reflected in the National Association of Home Builders monthly report was discussed. Writing for Bloomberg the following day, Bob Willis discussed the unexpected decline in housing starts in the new Commerce Department report. Two days later, Mr. Willis along with Shobhana Chandra discussed the unexpected decline in existing home sales reported by the National Association of Realtors (NAR) that day along with the report that the Bloomberg Consumer Comfort Index also declined. Links to these three reports are found here:
Home Builder Sentiment Stagnates in May: NAHB

Housing Starts in U.S. Unexpectedly Fall to 523,000 Pace; Permits Decline

U.S. Economy: Previously Owned Home Sales Unexpectedly Fall

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Double Dip

It’s official, a report released by Clear Capital concluded that we are in a “Double Dip” real estate market.  This should come as no surprise to anyone who has been following this blog or tracking the foreclosure market.  Below is a video released by CNBC.com that explains what it is, how it got here and where we are going from this point.

One interesting statistic that they cite in the report is the fact that Philadelphia has fared relatively well in this down trend in the real estate market, only declining 2.2% below the market bottom of 2009. I guess that’s a small glimmer of hope that we can hold onto…for now that is.

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Inventory Levels

Inventory levels in the Philadelphia housing market are up over January 2010.  The latest data TReND MLS reports the following:

County Available Units Months of Inventory
Philadelphia 8,138 9
Montgomery 4,829 8
Bucks 3,421 8
Delaware 3,367 9
Chester 3,361 9

* Calculations based on single family dwellings as of 02/14/2011

These numbers basically tell us that if no more homes were listed for sale as of today, it would take 8 or 9 months to sell off the current inventory of homes.  This is an over-supply.  When there is an oversupply in the real estate market this puts downward pressure on pricing. 

Back when the market was on fire in 2004-2006, it was not uncommon to see inventory levels in the 2-3 month range.  In some areas, there were months that the levels went under 2 months.  Homes were selling the day that they went on the market.  This was a classic example of undersupply.  An “in balance” inventory is generally viewed as being between 3-6 months of supply.

It will be interesting to see how inventory levels are affected as the Spring Selling season begins.  Traditionally, Spring is the time when Sellers list their homes.  So we may see an uptick in inventory as new listings hit the market.  The question is, will the Spring Buyers be there to soak up the inventory?

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