Ray & Nancy the Alaskan Woods

Appraisal Rules May Change... again

2009-10-26T07:13:00Z

House of Representatives lawmakers working on finance reform have approved an amendment to proposed consumer protection legislation that will retire the current appraisal rules that went into effect last May. The old law, known as the Home Valuation Code of Conduct (HVCC) will be phased out if this new bill is passed.

HVCC was intended to establish an "arms length" relationship between lenders and appraisers. But as lenders started using middlemen, known as appraisal management firms, to select appraisers the quality of appraisals suffered. National appraisal management firms, not familiar with local markets, often selected ill-qualified appraisers who produced low quality and inaccurate appraisals. As a result home purchase deals fell apart when the bad appraisals came in.

This amendment will redefine the rules to protect the integrity of appraisals. It should provide appraiser selection methods and rules to achieve more accurate appraisals. There are provisions to allow communication of sellers, buyers and brokers with appraisers.

There are also provisions dealing with compensation for appraisal services. Many appraisers have been forced to accept lower fees when appraisal management firms are involved with the current HVCC rules. And... unlike the old HVCC, this law will apply to all loans. HVCC applied only to HUD loans like Fannie Mae & Freddie Mac gauranteed mortgages.

Questions? Comments? click or call... we love to talk real estate!

It's Amazing What You Can Learn From a Carton of Salt

2009-09-21T07:05:00Z

I love things that put hard-to-understand concepts in practical perspective. Here's one I ran across while waiting for my wife at the hair dresser the other day. It's about our own galaxy, the Milky Way. Scientists think that there are between 200 and 400 billion stars in the Milky Way.

To get a sense of what that means you can compare it to the grains of salt in that familiar blue and white round carton of Morton's salt. You know the one I'm talking about with that little metal pour spout that flips up. Well it turns out that there are about 15 million grains of salt in one of those cartons.

So if you go out and buy 26,000 of those cartons of salt you will have as many grains of salt as there are stars in the Milky Way galaxy.

And if you wanted to make a one-dimensional model of the Milky Way you'd lay out all those grains of salt on a large piece of black cloth so that each one was seven miles from it's nearest neighbor.

But I don't advise you try this at home. The piece of black cloth would have to be twenty-five times larger than the earth!

That's how big the Milky way is...

Home Builders Scale Down to the New Reality

2009-09-21T00:55:00Z

New home sales volumes have increased over the last few months. From February through May of this year we averaged less than ten new homes closed per month. Since May things have perked up somewaht. The last two months have seen thirty a month closed. That's a far cry from the peak of 2005 and 2006 when we closed 50+ a month but it's an improvement over the last 12 months. One of the reasons for the improved numbers is the fact that most builders are building smaller homes. Average prices...(read more)

Real Estate Secrets - How Agents Are Paid

2009-09-17T06:21:00Z

Have you ever wondered just what happens to that big real estate commission the seller pays to sell a house? Ever wonder how the Buyer’s agent gets paid? I think lots of folks have. So I thought I’d write an article explaining where all of that money goes.

The first thing you need to know is that the broker, not the agent, gets the commission. Each company has just one broker. I'm an associate broker at Prudential Jack White-Vista Real Estate but the company has just one broker for three office locations with over 100 sales associates and associate brokers. You as a seller will normally be dealing with a sales associate or an associate broker. That person must operate under the supervision and direction of the broker of the company they work with.

Most brokers in our market charge a percentage of the sales price as a fee for their services. This fee can range from as little as 1% to over 10%. In our market a typical broker’s fee for an existing house is 6%. That’s $12,000 for a $200,000 house. Let’s run with that example and follow the money in a typical Valley transaction.

In most cases the listing broker will offer part of their commission as an incentive to the selling broker. Most will split the commission 50/50. In the Valley RE/MAX, Keller Williams and some independents are starting to keep more than 50% of the broker’s commission. Lately we’re seeing 2.5% of a 6% broker’s commission offered to the selling broker by these companies.

On a 50/50 split a typical transaction looks like this:

Listing agent... the broker has an agreement with your agent that determines how much the agent is paid. 60% of the broker’s fee is a common amount to pay. Another arrangement is to have a fixed monthly fee called a "desk fee."

The agent is a independent contractor in most cases and must then pay their expenses out of this amount. Agent expenses usually include advertising, automobile costs, gasoline, MLS & Realtor® dues, office supplies, signs, computers, insurance, etc.

So the listing agent gets around $3,600 and might pay $600 in expenses. That leaves $3,000 before taxes that your listing agent makes on your $200,000 house.

Selling agent... the selling agent will have a commission split or a desk-fee arrangement with the selling broker and expenses similar to the listing agent. So we can assume the selling agent also ends up with $3,000 before taxes. Their broker gets the rest.

Although there are exceptions and broker-agent agreements vary, almost all of the real estate agents in our market are paid this way. Some agents have "teams" with licensed people working for them called "buyer’s agents." They work sort of like a proxy for that agent and typically receive 50% of the selling agent’s commission. In this case the buyer's agent is working for the selling agent. By the way if the agent they work for also has the listing, then that buyer’s agent can’t represent you as a buyer.

So how does all this affect you?

As a seller you might want to make sure your agent is earning their commission. Ask them about their marketing plan for your house. Most people will learn about your home from the Internet or from another agent. Ask how they are presenting your property on the Internet. And..is it easy for other agents to show & get information? Are competing homes offering higher commissions?

As a buyer you can use your own agent to represent you at no cost. If you use the seller’s agent they earn twice the commission, you save nothing, and there’s no one in your corner negotiating and advocating for you.

See more at http://alaskahomepro.com

The Valley's High-End Homes Move Slow

2009-09-14T22:33:00Z

Real estate, like any other business that involves selling a product, is affected by “supply and demand.” And if you’ve been trying to sell a high-end home in our market you have a painful first-hand knowledge of it’s implications. We have too many high-end listings in our local market.

   The red vertical bars in the chart above show the homes sold since January of this year. The green bars show how many homes are currently for sale. The chart is divided into under-$200,00, $200-300K, $300-400K and over-$400K price ranges.
   In the over-$400,000 range, just 22 homes have sold so far this year. The green bar shows 95 active in that bracket. That means we have a 34-month supply of homes in that range.
   In the under-$200,000 range 218 have been sold this year. 127 are on the market. That’s just a 4.7 month supply!