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Just what I needed, less hours in my day. But alas, the time has come for us to spring forward an hour this Sunday, March 14 at 2am. (Yes, this means I will be grumpy Monday – Thursday while my body adjusts to the time change).
This is also a good time to change your smoke detector batteries and replace your heating and air conditioner filters.
All data provided by MRIS.
As localities start discussing and issuing new tax rates in conjunction with new tax assessments, I thought it would be a good idea to explain the difference between assessed value and market value.
Assessed value is defined as the dollar value of an asset assigned by a public tax assessor for the purposes of taxation. For our purposes, and the purposes of this blog, we will only be addressing home assessments. According to The Code of Virginia (Title 58.1-3201) the assessed value of each home should be 100% of the estimated market value. The locality in which the home is located hires an appraisal firm to come in and place actual values on parcels of land and their improvements. It would take forever to assess each individual home, so the appraiser selects of homes in different areas and applies the findings to a mass of similar homes. This system can account for assessed values that are not 100% of market value. If the appraiser is not aware of certain nuances that effect price in the subject area the value placed on your home may not be very accurate. If the appraiser happens to select the smallest home in your area or neighborhood as their representative sample, then the assessed value could come in low. If they choose the largest home, the value could come in high. Tax records also has a baring on the accuracy of tax assessments. If you have finished your basement, but never got a permit, or the locality has never reflected the improvement in their records, then the assessed value will be off. Appraisals, nor assessments, are an exact science. Human error and subjectivity are major factors in determining your home’s assessed value. If you happen to have just purchased your home and you notice that your assessment is lower than your purchase price, I wouldn’t complain. It doesn’t mean you are losing value. It just means that your taxes will be lower than if they had actually assessed at 100% of market value. However, if you just purchased your home and your assessment is high, you may want to appeal your assessment. A valid appraisal and additional comparables will be needed as evidence in your assessment hearing.
What is market value? Market value is defined as the price at which buyers and sellers trade an item in an open market place. In real estate it is the contract price for a particular piece of property. However, because most buyers need a loan from a bank to make a home purchase, the banks want to make sure the purchase is a sound investment. Therefore, the bank will require an appraisal to ensure that the purchase price is justifiable. The appraiser will use data from other homes in the area that have sold to calculate what the home is worth. The fact that the home is on the open market and that a buyer desires the home help determine what a home is worth. Without these factors, market value cannot be established. I can list my personal home today for $500,000. That doesn’t mean it is worth $500,000. It is worth nothing until a buyer writes an offer for what they are willing to pay for me to sell them my home. In our current market, buyers want lower market values. The lower the market value, the more affordable the homes. Sellers and economists, on the other hand, are anxiously awaiting market values to climb. We are in year 3 of a down market. (Some would argue that this is actually year 4).
The value to take away from this post is that most home owners want to see low assessed values and high market values. Looking at the most recent sales in your neighborhood or community can help you determine the accuracy of your assessment.
All data provided by MRIS.
Who would have thought that this area would be hit by several feet of snow? Well, we have been. So let’s go over some snow safety for you and your home.
1. When shoveling, be sure to wear loose clothes and take breaks. Don’t wait until the snow is done falling to start shoveling. The snow is easier to remove if you shovel it every couple of inches that fall. There is nothing worse than taking a trip to the hospital with chest pains in this weather. Well, maybe a few things worse, but let’s not think about those.
2. Be sure to clear snow away from hose bibs, dryer vents, and air condensers. You will also want to clear the snow away from gas meters and fire hydrants. If you haven’t unhooked your garden hoses and flushed the water from the pipes, go ahead and do it before the next storm hits.
3. Keep walkways and sidewalks clear. Remember to sprinkle snow salt or kitty litter on slick spots. There are more pedestrians during this sort of weather and it is safer for them to walk on cleared sidewalks than in the street. The postal service will also not deliver to your house if they can not easily access your mailbox.
4. Make sure that your house numbers are visible from the road. In case of an emergency you want to make it as easy as possible for emergency personnel to find your home.
5. If you must drive in this weather, clean off the top of your car. It is extremely dangerous to drive around with 20 pounds of snow precariously balancing on your SUV. If that snow flies off you could blind another driver with your snow. So, take the extra few minutes and clean off your entire car!
6. Make sure your animals have plenty of food and water. During cold weather animals tend to eat and drink a little more than normal. Give them access to food, water, and warm lodging.
7. If you are using gas powered products make sure that you have functioning carbon monoxide detectors. Also be sure that you have plenty of extra batteries on hand.
8. Never leave a lit candle unattended. Accidental fires are a major problem during weather like this. If you leave a room, blow out your candles.
If you have any other safety tips you would like to share please feel free to leave them in the comments section!
Happy Monday! As many of you know, I am a big cupcake fan! I just love cupcakes! Fredericksburg City has a new attraction, Colonial Cupcakes. Located on Caroline Street near the Executive Building, Colonial Cupcakes offers a variety of cake and icing flavors. Of course you can find traditional flavors, but they also offer exotic flavors like Smores Cupcakes and Irish Cupcakes – Guinness cake and Irish Cream frosting. My good friend, Drew Fristoe, and I decided to take a little trip down to taste some cupcakes. Warning: we each eat 6 cupcakes. I do NOT recommend eating 6 cupcakes in one sitting. Drew and I are professional cupcake eaters, we could handle the sugar rush… barely.
Address: 611 Caroline Street Fredericksburg, VA 22401
Hours of Operation:
Wednesday - Saturday 10am – 7pm
Sunday 12pm – 8pm
Yay! It’s Friday! And Furry Friday, to boot! Let’s see who’s up for adoption this week.
Meet Barney!
Barney is a Domestic Long-Hair Black and White kitten. He is about 6 months old. He loves to cuddle and is being cardboard scratcher trained while at the shelter. He is doing very well at this training. Barney is a social butterfly and really wants to find a new family soon. He is neutered and up-to-date on his shots. He is good with adults and children. If you have room in your heart and extra hugs to give out for a sweet cat like Barney, contact the Fredericksburg SPCA today and set up an appointment to meet the feline adoptees!
Meet Betty!
Betty is a 3 year old Boxer who wants a family who can spend time with her. She is a very sweet girl. She is a little shy, but comes out of her shell pretty quickly. She loves to be brushed. She needs a family who will help her adjust to her new surroundings. Experienced dog owners would be a perfect fit for Betty. She is good with other dogs when properly introduced. Betty is spayed and is up-to-date on her shots. If you think Betty would be a nice addition to your family, call the SPCA and arrange a meeting with sweet Betty!
The Fredericksburg SPCA is located at 10809 Courthouse Road Fredericksburg, VA 22408. Their phone number is (540)898-1500.
So, we’ve gone over what properties qualify in the proposed guidelines, how the bank will qualify a seller to be in the program, and the rules and regulations the banks will have to follow if they choose to be in the program. Now, I’m gonna get down to the problems with this document and its implementation in the real world. (You know, the place where we can’t pay our mortgages with kittens and rainbows).
1. This program assumes that the banks are capable of meeting these timelines with the amount of faulty loans on their books. That, my friends, is just crazy talk. Some of the little banks may be able to meet the expectations outlined in this document, but the big boys will never be able to hold up their end of the bargain. First, these banks are horribly under staffed in their loss mitigation departments. Why? Well, who wants to work in a loss mitigation department? You get yelled at all day and get the joy of working with emotional train wrecks. Employee turn-over is extremely high in these departments. So, the banks will have to hire more employees to handle the amount of short sales that will be requested and processed. Where are the banks going to get the money to not only pay these new employees, but train them adequately to do the job effectively? Oh, that’s right, bail out money… cause we know the CEOs will not be foregoing their bonuses to make the banks work more smoothly. Another problem in the this arena is that the banks are being asked to hire more people to facilitate this program and the bank’s benefit is $1000 a transaction. Ummmm… $1000 a transaction does not offset the cost of an employee. It seems that from this perspective the banks have very little incentive to participate.
2. Yes, I said participate. This is an OPTIONAL program. Banks had until the end of December to alert the Treasury Department that they would be participating. I’m surprised we all didn’t get trampled in the mad rush to sign up. (sarcasm) Many of the larger banks are working on streamlining their own short sale process that is advantageous to their bank. Why on earth would they participate in a program that limited their ability to recuperate funds? Now, I’m not a business major, but I don’t think banks are in business to lose money. And at this point in history, they are trying to mitigate their losses. The $1000 participation bonus just isn’t enough incentive to take bigger losses by not being able to go after the defaulting borrower civilly. The guidelines state the the lien holders must fully release the borrower from future liability for the debt. At some point consumers need to held responsible for taking out risky loans. Houses are one of the few products that people purchase and expect to be able to sell it at a profit. When we buy a car, we expect to sell it at a loss. When we buy a tv, we expect to sell it at a loss. Investments are risky and there are no guarantees. Again, it just doesn’t make sense.
3. The banks are all expected to have the same standard process, the same documentation, and the same timeframes. We might as well all take jobs herding cats. Banks don’t even understand their own paperwork, much less buearocratic paperwork. And, what happens to all of the short sales that are currently in the system? Do we have to start all over?
4. One of my favorite guidelines is that REALTORS(R) will be expected to pay the cost of any contractors the banks hire to help facilitate the process. Well, thank you Treasury Department for telling the banks that they can no longer cut reasonable commissions, but allowing them to charge me to do THEIR job. Loss mitigation departments are already under staffed so we can safely assume that banks will need to hire contractors to facilitate these deals. And, Yay! I get to pay for that. Well, I’m here to tell you, I WON’T pay for a bank to hire someone else to do the job they should be doing. I didn’t give out the bad loan, I didn’t default on the mortgage, and I’m not responsible for the economy tanking.
5. The guidelines also state that transferring all of the documents through electronic means could be a problem. They haven’t quite worked this detail out, but I’m sure they will before the program really takes effect in April. (sarcasm)
6. One of the biggest problems I have is that banks will be establishing the minimum net they are willing to take on the property BEFORE the property is under contract. This can cause huge problems. I recently had a short sale where the bank insisted on a net. The purchase price had to be $410,000 to meet that net. The house appraised at $400,000. The bank demanded the purchaser pay more for the house than what it was worth by bringing $10,000 in cash to the table to make up for the difference. Isn’t this type of behavior what got us into this mess? The market bears what the market bears. I don’t see banks brushing up on market data and conditions for every area that they have loaned in. They are doing short sales to mitigate loss. That’s what they will do, regardless of how it effects the consumer.
7. One of the funnier guidelines in the document is that properties that can qualify for the HAFA program should have also applied for the HAMP program. The HAMP program is the loan modification program. What a successful program. (sarcasm) How many loans have been successfully remodified? How many homes have been saved from loan remodification? Maybe a handful. Loan remodification only allows to the banks to adjust their numbers and the borrower to postpone a short sale or foreclosure. It is not the end all, be all answer to our problems. It is band-aid.
These are the points that I see wrong with this document. I know that NAR and many designation and certifications for REALTORS(R) are touting this document as the glue that will bring the real estate market back together, but I can’t agree with them. I think this document gives false hope to consumers and REALTORS(R). I think it is pretty poorly thought out by individuals who aren’t dealing with the consumer side of short sales. I think the document means well, but all in all, it’s a waste of paper. I wanted to explain the document so that everyone would start thinking about what changes, if any, this will bring to the real estate market. Let me know your thoughts. I’d love to hear them!
In Part 1, I addressed which properties qualify for the proposed program and how the bank handling the short sale will determine if the borrower (seller) is eligible. This post will deal with the process the banks will be required to go through once a contract is received on a property approved for a Short Sale.
Imposed Guidelines on Banks for Approving a Short Sale Transaction
1. Loan servicers must determine, with their investors, the minimum net proceeds that will be acceptable . They must determine this before the Short Sale is started. This amount is what the bank wants to walk away from the deal with.
2. The loan servicer and investors must also determine the amount of transaction costs they will allow. This includes paying for buyer closing costs, paying for HOA documents, and the cost to the seller for closing the transaction.
3. The servicer must provide the borrower with a Short Sale Agreement. The Short Sale Agreement outlines the roles of everyone in the transaction and key marketing terms. Some terms of the Short Sale Agreement include:
4. The borrower must submit a request for Short Sale approval within 3 days of ratifying a contract. The request must include: contract/ addenda, purchaser’s financial documentation, and status of subordinate liens and or negotiations with subordinate lien holders.
5. The loan servicer must indicate approval or disapproval of Short Sale within 10 business days.
6. The loan servicer can not require closing earlier than 45 days from date of sales contract without borrower consent.
If the Short Sale is successful the following financial incentives are granted:
In Part 3 of this series, I will point out the flaws of this document and it’s implementation, as I see it.