The Veteran’s Administration has revised appraisal requirements recently, to no longer require that VA properties have all appliances installed prior to close of escrow. This follows modifications that FHA made to their appraisal requirements in 2008. If you have specific questions about condition requirements for VA appraisals, you can call their Construction Evaluation department in Phoenix at (602) 627-3050.
Debbie was interviewed by Ruth Simon of the Wall Street Journal; read the interview and article.
Virtually any subdivision or extended market area can be studied using MLS to determine what changes (if any) have occurred in overall prices. To do this type of analysis in an abbreviated format, you can take the following steps:
Search the subdivision or area you wish to study, and enter the parameters such as subdivision name, map page, legal section, square footage range, etc.
Step 1: If you want to figure out changes in pricing over a 6 month period, enter status “S” for sold, any other parameters such subdivision name, square footage, etc., and for date of closing enter “past six months”. If you want to figure out changes in pricing over the past year, just enter status “S” for sold and it will automatically pull up the last twelve months of sales based all the other parameters you added to the search. Print out the results and indicate that you want the search criteria to print. This will give you the short report you will need to complete the analysis. Put this report aside.
Step 2: Enter the same parameters you had before as far as area, square footage, subdivision name, legal section, etc., but if you want a study of the past six months, change only the date of closing from “past six months” to “between”, and enter the two dates that will be the start and end dates of the closings during the previous six months. If you want a study of the past year vs. the prior year, change the status from “S” to “H” for history, and enter the closing dates to bracket the dates that would give you the closings during the previous twelve months. Print out this report as well, along with the search criteria.
Note: if you don’t have enough properties to result in enough data, (20+) broaden your search so it will include more properties. The less data you have to analyze, the more likely your study could be skewed or inaccurate.
Step 3: Compare either the median or average selling prices to each other on the two reports from the two different time frames. Subtract the median price that is the lowest from the two reports, from the median price that is the higher of the two reports. For example, the report from the past six months shows a $376,000 median selling price for what you were searching. The report from the previous six months indicates a $400,000 median selling price. Subtract the two figures to obtain the difference. Convert that to a percentage by dividing the difference by the median selling price from the “oldest” data. In the example, that would be:
$400,000 – $376,000 = $24,000
$24,000 divided by $400,000 equals .06, or 6%
Since we did our two searches in 6 months increments, it shows there was a 6% decrease in predominant prices in the past 6 months, or 1% per month. If you did your two searches based one year apart, the resulting percentage will be the price decrease attributed to the past twelve months.
Remember, this is just a “quick” study to give you an idea of trends in pricing in the recent past. Also the more data you have, the more reliable your analysis will be.
This is an abbreviated way of studying price trends in order to better assist your clients.
If you have further questions, you can contact us at Huber Appraisal, (702) 243-3256.
Last week I was featured as a guest blogger on Jan O’Brien’s blog authoring on the topic of using Short Sales and REOs as comps. You can check it out over on Jan’s blog: Should an Appraiser Use Short Sales and REO’s as Comps?
Required repairs will be limited to necessary requirements. They fall under the three “S’s”: Safety, Security (of the loan), and Soundness. Typical conditions requiring further inspection or testing by qualified individuals or entities include (if the appraiser thinks it may be an issue): infestation – evidence of termites, inoperative or inadequate plumbing, heating or electrical systems, structural failure in framing members, leaking or worn out roofs, cracked masonry or foundation damage and drainage problems.
Examples of property conditions that may represent a risk to the health and safety of the occupants or the soundness of the property for which FHA will continue to require automatic repair for existing properties include, but are not limited to:
Repairs/inspections no longer automatically required by FHA:
Questions to FHA (Santa Ana office) can be directed to (714)-796-5577