News Room

  • 15 Aug 2016 5:32 PM | Amy Newcomer (Administrator)

    While the Federal Housing Administration's overhaul of its Single-Family Housing Policy Handbook last year offered loan originators more clarity on lending policies and loan underwriting standards, some changes made to the property valuation policies are causing confusion and delays, according to speakers at a real property valuation forum at the 2016 REALTORS Legislative Meetings & Trade Expo this week.

    All properties bought or refinanced with an FHA loan have to be appraised by a HUD-approved home appraiser. When purchasing a property with a conventional loan product, the appraiser focuses on determining the market value of the home; however, with an FHA-insured loan, the appraiser not only determines market value but also inspects the home to ensure it meets certain minimum property standards. Requiring appraisers to take on home inspection-type duties to ensure standards are met appears to blur the line between appraisals and home inspections and has raised questions among consumers, agents and appraisers.

    "FHA appraisal guidelines are stricter; the standards set the benchmark for appraisals in the industry," said Gary Eisenbraun, appraisal/technical support branch chief of the Federal Housing Administration. "The guidelines are strict though to protect consumers and safeguard FHA's mortgage insurance fund and taxpayer dollars."

    Martin Wagar of Wagar & Associates Inc., of Kalamazoo, Michigan outlined several recent changes to the handbook, but said that many were, in fact, not changes to what appraisers are being asked to do – the handbook simply uses more definitive language to describe what steps appraisers "must" do as part of the process. Those steps include operating all conveyed appliances and observing their performance; fully accessing attics and crawl spaces, if possible; reporting if roof coverings are in good condition; noting if any sump pump is properly functioning; and verifying that any pool is operational and does not pose any hazards.

    "The appraiser's job is to observe, analyze and report to the underwriter that the property meets HUD's minimum property requirements," said Wagar. "The danger is that consumers can mistake the role of the appraisal for that of an inspection."

    Panelist John Anderson, a Realtor® and appraiser with Twin Oaks Realty Inc., Minneapolis, Minnesota, agreed there is confusion about whether and how appraisals are different from home inspections. "There is growing confusion among consumers about whether they also need a home inspection," he said. "An appraisal makes sure a home meets FHA minimum standard requirements; it is different from a home inspection and does not replace it. Buyers should still get an inspection, and it's often required by the lender."

    A low home appraisal can kill the sale of a home, so when it comes to minimizing problems, the panelists agreed that good communication is critical. David Schiffmayer, vice president for Wells Fargo National Underwriting and Production Risk Management, told attendees that despite some early challenges, there is no shortage of appraisers willing to take on FHA-insured home appraisal; however, many in the audience seemed to disagree.

    "There have been a lot of questions because of the recent changes, but those have died down significantly," said Schiffmayer. "I recommend agents work closely and be responsive to appraisers; it's important to communicate with the appraiser, answer questions and provide any additional requested property information."

    Buyers, sellers and Realtors are free to ask appraisers or lenders to consider additional property information, documentation and comparisons. They may discuss the unique conditions of a home and its neighborhood with appraisers. Once an appraisal has been completed, any communications about errors or offers of additional information must be with the client who ordered the appraisal, generally the lender.

    Anderson said that concerns over FHA appraisals could hinder borrowers' ability to compete in today's housing market. "The consumer is the one who is getting hurt because of delays or not getting their offer accepted," he said. "We are in a market where homes are getting multiple offers, and if sellers are hearing there are problems with FHA appraisals they may not be willing to work with buyers using FHA-insured loans."

    According to NAR's most recent Realtor® Confidence Index, when reporting about their last contract that went into settlement or was terminated over the period January–March 2016, 27 percent had delayed settlement, and seven percent were terminated; of the 27 percent delayed, 18 percent were because of appraisal issues, and of the 7 percent terminated, 5 percent were the result of appraisal problems.

    To help ensure the FHA home buying process functions smoothly and without delay, in March 2016, NAR President Tom Salomone sent a letter to the Department of Housing and Urban Development concerning FHA's handbook. NAR asked the agency to reconsider some of the language, especially that which requires appraisers take on additional home inspection-type duties that were not previously mandatory.


  • 07 Aug 2016 4:57 PM | Amy Newcomer (Administrator)

    Home inspectors are hired to perform an objective evaluation of a home's condition, but at times, their discoveries can prompt the buyer to terminate a sale contract.

    Dylan Chalk, owner of Seattle-based Orca Inspection Services LLC, writes on Redfin's blog that, in his experience, the following three issues kill the most deals:

    1. Cover-ups. The house may look great, but a deeper inspection may reveal short-cuts on repairs or renovations made by a prior home owner. These commonly occur in homes that were purchased to be flipped. "I sometimes find flips in need of structural repairs or discover chronic moisture problems that were covered up in an effort to sell the house," Chalk writes. "On the outside, everything looks new and shiny, but there may actually be deep dysfunction lurking in the bones of the house." He also finds problems with vacation homes that have been remodeled multiple times over the years. "There can be a hodgepodge of foundations, additions, and rooflines that make them fundamentally different than they appear," Chalk notes. "These are not 'bad houses,' but they are often quirky and may present risks that buyers weren't anticipating. One tip that often gives these homes away is a quirky roofline that shows obvious additions."
    2. More repairs than anticipated. This is a common scenario with younger homes, Chalk says. The clients may say, "It's only 20 years old!" But while most 20-year-old houses are in good shape, they often require expensive replacements for systems that last only 15 to 20 years. Systems that usually need to be replaced after 20 years are a deck, furnace, roof, and appliances. Carpets, the home's siding, and even hardwood finishes may need special attention at that point, too. The maintenance list may come as a surprise to some buyers.
    3. The home has bad bones. Buyers go into fixer-uppers knowing they intend to do a host of repairs, such as the furnace, kitchen, bathrooms, flooring, paint, and appliances. But buyers may not have taken into account the foundation, frame, roofline, floorplan, and drainage. A home inspection that turns up structural problems or drainage issues will add a significant amount to the buyer's budget — even pushing them out of their price range.

    Source: Daily Real Estate News | Wednesday, October 07, 2015

  • 21 Jul 2016 2:12 PM | Amy Newcomer (Administrator)
    Spring and summer tend to be good months for homes to sell, compared to a slower winter market, but even that longtime trend doesn’t fully tell the story of how quickly homes seem to be changing hands. One can see just by driving down the roadways that properties aren’t staying on the market that long. A real estate sign goes up and it doesn’t tend to be long before a ‘sold’ sticker has been mounted to it.

    We’re not quite yet looking at some of the rather insane bidding wars that are increasingly characterizing the market in desirable areas. Such bidding wars have pushed prospective bidders to, in some cases, engage in risky buying practices, such as not getting a home inspection before the purchase goes through.

    In spite of the continuing red-hot market, at least one home inspector was quoted this week saying he’s actually had a significant drop in business over the last year, as people are too afraid to attach any kind of condition to their purchase offer for fear of putting themselves out of the running.

    Getting an inspection from a reputable professional can end up saving a buyer a lot of grief.

    And a lot of money.

    In the worst case scenario, you could wind up with a home with serious deficiencies that you could be on the hook to pay for.

    Everything from the roof to the furnace, the foundation to the wiring are key elements that most laypeople wouldn’t necessarily even notice.

    While you’re worried about paint colors and the possibility of putting in new hardwood, your home inspector really gets down to the nuts and bolts of how the house is built.

    There are limitations, of course, as nobody can start opening up walls and ceilings, but a good inspector will notice things that the average home buyer would walk right past.


  • 07 Jul 2016 3:50 PM | Amy Newcomer (Administrator)

    close inspection of house

    Do-it-yourself household projects have become increasingly popular, but home inspectors are finding a host of safety problems caused by overconfident home owners seeking shortcuts. “Home owners now see these DIY TV shows, which make these household remodeling projects look easy. They can go to a big box store and easily get the materials too,” says Randy Sipe, president of the American Society of Home Inspectors in Spring Hill, Kansas. “They think: ‘How hard can it be?’” Howard Pegelow, a home inspector in Arizona and Wisconsin, says home safety is a top priority in his inspections. He looks for loose carpeting, uneven steps, and water temperature extremes, among other common risk factors. Here are additional concerns noted by Pegelow, Sipe, and others in the field:

    Wobbly decks

    Look for: insecurely attached railings and wobbling or improperly sized posts.

    “Decks shouldn’t move,” says Scott Patterson, an inspector with Trace Inspections in the Nashville area. Wood decks can collapse if they’re not properly attached to the house or if they rely on the house too much for support. “Fasteners can corrode, which could result in failure of the deck. Many times owners are unaware all these problems exist,” Sipe adds.

    Incorrectly removed walls

    Look for: sagging roofs and ceilings.

    Open floor plans are appealing, but not when they overlook structural issues, which can happen when home owners fail to identify load-bearing walls. Pay attention to the age of a home, Patterson says. In newer construction, homes tend to have greater side support, which can accommodate open floor plans. Older homes relied more on the center for stability, which can mean trouble for amateur wall-busters.

    DIY plumbing

    Look for: wrong pipes used for connections.

    A common error Patterson sees in plumbing jobs comes from home owners who purchase a sink and cabinet from a big-box store and handle the installation themselves. Using the wrong pipes often results in costly water damage. Patterson says he commonly sees flexible, accordion-shaped pipe under the sink for the drain, even though they do not comply with residential plumbing codes. Pipes should be smooth and unridged to prevent clogs or waste buildup.

    Missing garage door sensors

    Look for: sensors missing or not facing one another.

    Garage doors can pose a big safety threat if improperly installed, Sipe says. The safety sensors must be connected and aligned correctly for the garage door to go down, and if it doesn’t, the owner may just uninstall them. Additionally, a poor connection could be the culprit of the sensor malfunction. Sipe says he often sees the safety cable being threaded incorrectly, which could cause it to break and send the garage door door crashing down.

    Disarmed alarms

    Look for: missing batteries or disconnected alarms.

    Home inspectors aren’t always required to test smoke and carbon monoxide detectors, but many do. Municipalities often suggest installing them within 15 feet of the primary entrance to each sleeping room. Home owners often remove them if they start chirping or disconnect them to prevent false alarms as they cook. “Many times I’ll open it up and find the battery is gone,” Pegelow says. “That is a big safety concern.”

    Faulty electrical

    Watch for: exposed wiring and overloaded circuits.

    Electrical problems often emerge when an addition has been made to a home, such as a basement or attic remodel. Home owners may add two wires to one circuit breaker where there should be only one. Or, Sipe says, he sees amateurs using a wire that’s too small in the breaker, which could pose a fire hazard

    July 2016 | By Melissa Dittmann Tracey

  • 15 Mar 2016 7:22 AM | Amy Newcomer (Administrator)

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  • 18 Feb 2016 9:26 PM | Amy Newcomer (Administrator)

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  • 12 Feb 2016 8:00 AM | Amy Newcomer (Administrator)

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