6 Questions for an appraiser

In an effort to understand the home appraisal process we interviewed San Antonio appraiser, John Wade. Below are four of the six questions we asked and a short answer summary.

Yesterday I went out on a limb and yelled to the world that the bottom has already occurred in some segments of the Arizona real estate market. I pointed out an example in El Mirage, and sure enough prices have indeed begun rising there.

As I explained, I’ve seen examples [...] No related posts. Related posts brought to you by Yet Another Related Posts Plugin.]]> by Tony Pomykala, REALTOR, ePro
Sunrise Investments, www.HomeListingsArizona.com

Yesterday I went out on a limb and yelled to the world that the bottom has already occurred in some segments of the Arizona real estate market. I pointed out an example in El Mirage, and sure enough prices have indeed begun rising there.

As I explained, I’ve seen examples of that throughout the valley. So today, when I was asked about a property in the 85032 zip code, I had to grin when I saw that here, too, prices have begun rising again!  Ok, so it’s only a slight gain, but the fact is that it is still a gain nonetheless.

The home I compared in 85032 is located mid-way between Thunderbird Rd and Cactus Rd, just east of Highway 51. It’s in the Paradise Oasis subdivision. This home isn’t on the market yet, but will be in a couple of weeks as it is a recently foreclosed REO property. Its Bank is still prepping it for sale and has not decided it’s selling price yet.

If I take comparables of this home over the last 6 months, the market value places the average price to be $117,100. However, if I take the comparables from only the last three months instead, the market value rises to an average price of $122,500, a 4.5% increase!

To be honest, I didn’t expect that to occur in the heart of north Phoenix. BUT IT DID!

Fellow Realtors, please check out your neighborhoods and post your findings in the remarks by Commenting to this article.  I am very curious to see how much more widespread this is. If the facts bear this out, hopefully the media will realize the truth in that the market already bottomed out and we are finally on the road to recovery!

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Many people still don’t get it, so I’m going to try to explain it a little better here. 

The housing market evolves. When the market evolves, the buyers and sellers must adapt or be rendered ineffective.  That’s natural. That’s survival.

If you are trying to sell a house and no one [...] No related posts. Related posts brought to you by Yet Another Related Posts Plugin.]]> by Tony Pomykala, REALTOR, ePro
Sunrise Investments, www.HomeListingsArizona.com

Many people still don’t get it, so I’m going to try to explain it a little better here. 

The housing market evolves. When the market evolves, the buyers and sellers must adapt or be rendered ineffective.  That’s natural. That’s survival.

If you are trying to sell a house and no one is buying it, you must upkeep and maintain that house. You need to clean it, to watch over it, to repair it if something happens to it. You need to maintain some utilities to it.  All that is expensive. Is there a better way?

When the housing bubble crashed and banks found themselves with a lot of inventory to sell, they dutifully handed them over to their real estate agents who placed the houses on the market at perceived market value. Many homes would eventually sell, but like the rest of the glut of inventory out there, most took time to sell unless something about that property really stood out over its peers (Even today, many people don’t realize that in a buyer’s market you can’t add price to extra valued items in the home, but it’s the extra valued items that does get you sold when the price is comparable to the other similar, but less featured, homes). Many foreclosure homes are rather plain, if not distressed properties.  The only thing in their bag of tools that could set them apart from the pack turned out to be pricing. 

Today, many Banks have figured out that if they want to move their inventory faster (so that they don’t have to waste more money on foreclosures than they already have), they will start out by listing their homes for sale for a lot under market value.

Why?  Well, for months Buyers have been low-balling offers in to them anyway.  So the banks have evolved.  They learned that if you throw bloodied meat on the ground you attract more vultures. When vultures start fighting over the meat, they’re willing to do more to win that prize. The low ball offers rise back up in the bidding war and before you know it, banks are getting respectable purchase offers for the homes anyway. This all happens now within the first week on the market (usually the first weekend), the house gets Sold, and the bank avoids having to pay prolonged retention costs.  From a business standpoint, this is truly ingenious and it usually works!

Although the winning offer is often less than actual market value still, it’s usually only slightly less. So when you figure in retention costs saved, the bank has made out quite well.  The only downside is that a home sold for less than market value drives down comparable property values, so the pricing slide continues.

But as far as the Bank (seller) and Buyer of that home are considered, they both win.

And that is why it has evolved this way.

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