We all know that a great deal of the Real Estate market crash was due, at least large in part to, irresponsible lending (and borrowing). That inflated property values certainly played a role, is no secret and indeed, something had to be done to change things. BUT, wait until you see just how far the pendulum has swung to the opposite but equally insane side of the spectrum. As a follow up to our last blog Appraisal Rebuttals; The Cure for a Schizophrenic Market I will outline how real estate appraisals used to be ordered and how they work (or don’t) now. If you own property, plan on owning property, or at all have a stake in the real estate market, this will be of interest to you.
This is a tool by which you can “argue” the value of your appraisal with the bank while in the process of a refinance or purchase. Keep an eye on the comps (here it comes, an unabashed plug for this site) and be sure to stay tuned in for listing searches and monthly sales data. This way if you run into a low appraisal, you might be able to fight it with an Appraisal Rebuttal and have the appraised value raised.
I will do an article on appraisals in the near future and go into more detail, but just know that in a great many instances, appraisers do not know the inventory as well as they should. If you can support your home’s value with honest to goodness and recent closed sales, then you have a great shot at having that appraisal value changed. The trick is being able to intelligently argue how your house is superior to the comps used by the appraiser and/or that the appraiser omitted comps that should have been used. Better appraisals through better comps will happen organically over time, but who knows how long these great low interest rates will last, so be proactive and try to refinance now if you can.
Check in periodically for your all important appraisal rebuttal tools, sales and other great information. You can also contact me for a referral to a banker who can help you with your refinancing or purchase needs.
4 Malibu Real Estate Partner Realtor
Standards for a Qualified Mortgage – “QM” – Could Have Major Market Impact
The new Bureau of Consumer Financial Protection (CFPB) will be responsible for defining a nationwide standard for a QM, thereby setting the consumer guidelines banks and lending institutions must follow before issuing a mortgage. (Read more here)
The idea of a QM is centered around “ability to pay”. If those standards include new loan limits and changes to the way debt is calculated, including future debt such as students loans, the QM is sure to hurt the market by taking an estimated 10%-25% (conservatively) of present borrowers right out the pool. You might think that in affluent areas such as Malibu, Calabasas, Palisades etc., that this will not matter too much, but you would be very wrong. The reason is that a great many of our entry and mid range buyers come from someplace else in the market and it takes EVERYONE being able to move their property to keep feeding the pipeline upward.
Congress is pressuring is pressuring the Federal Housing Finance Agency to not put QM into action on Jan. 10, 2014. This is not the time to roll back loan amounts and put the squeeze on real estate, and it seems Congress gets that (perhaps with a little Real Estate and Builder industry “enlightenment”).
Congress is claiming that FHFA can’t enact this without, well – an Act of Congress! We can use an Act of Congress right about now (at least in this case). In a nutshell, keep doing what you need to, lock in your loans and rates — and if you don’t, there may yet be a light at the end of the tunnel. Fingers crossed the light is not a train!