What’s So Important About Home Appraisals?

If you’re buying a home and getting a loan, appraisals are something you need to know about

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Today I want to go over the subject of home appraisals and what you need to know about them. First though, I want to thank you for helping our team get recognized as one of the top-20 luxury teams in Houston in 2016. Whether you’ve done business with us or referred us, we can’t thank you enough for your continued support, and we truly appreciate it. Now, how does a home appraisal happen? If you purchase a home and you get a loan, your lender will require that an appraisal is done before your loan is approved. Although the true definition of a home sale transaction is a price that a willing buyer and seller agree on, the lender will require a third party to visit the property and give it a fair market value. Typically, the lender will loan a percentage amount that’s agreed in the contract. If you’re putting 20% down on the loan, the bank will lend you the other 80% of what’s in the contract as long as the home appraises for the contract amount. The problem occurs when the home doesn’t appraise for the contract amount. When that happens, the bank will still loan the 80%, but only for the appraised amount—not the contract price.

If a home doesn't appraise for the contract price, many different things can happen.

Let’s say you’re purchasing a home for $1 million, you’re putting down $200,000, and the bank is loaning you $800,000. What happens if a $900,000 appraisal happens and results in a $100,000 difference? At that point, negotiations happen all over again, and there are four different options in which all parties can continue:

1. The buyer can bring in an additional $100,000 to the closing table.
2. The seller can reduce the price by another $100,000 to meet the lender’s needs.
3. The buyer and seller can find some common ground and make up the difference. This is typically the most common.
4. The buyer can walk away.

Is a home not appraising a common occurrence? Yes and no. A few years ago after the financial crisis, lenders were extremely cautious, so homes not appraising was a common occurrence. Fortunately, we don’t see that as much now. One thing our team does is meet the appraiser and bring documentation to justify the purchase price. We’ve found this to be a very beneficial thing to do and something that is welcomed by appraisers. As you know, there are many intricacies within this city when it comes to real estate, so this gives them additional information. If you’re buying a home and getting a loan, make sure that you bring all the information you can to get the appraiser to justify the home’s value.
If you have any questions about this topic or are thinking about buying or selling a home, feel free to give me a call or shoot me an email. I’d be glad to help you.

What's Been Happening in the March Market This Year?

What's been happening in the real estate market here in Houston? The key numbers for March are in, and I wanted to talk a little bit about our market's growth so far this year.

Selling in the Houston area? Get a market analysis report

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What's been happening the Houston market so far in March? I've got some key stats to share today.

The market has shown considerable strength this year and since we haven't really had much of a winter, I think the buying season has been pushed up a bit.

Each price segment in our market has shown an increase in February for the number of homes sold on a year over year basis. In fact, all segments above the $250,000 mark showed double-digit increases. Homes priced above $750,000 were up almost 28%.

Each price segment in our market has grown in February.

On average, prices climbed about 7% and days on market are up just a bit to about 64. Inventory, on the other hand, crept up a little bit to about 3.5 months worth of homes on the market, but we're still pretty low in some areas. Other areas have high levels of inventory. As you can see, due to Houston's size, we live like a group of smaller cities within an area, which is why you need to look at each area on an individual basis.

If we can help you with any of your real estate needs this spring, don't hesitate to give us a call or send us an email soon. We'd love to help you out!

Protesting Your Taxes This Year? Watch This First.

If you feel your property taxes don’t reflect the actual value of your home, I’ve got a few tips for protesting them.

Selling in the Houston area? Get a market analysis report

Purchasing in the Houston area? Get full MLS access

February is already here and that means it’s time to prepare for tax season. Today I’ll go over a couple ways to protest your property taxes if you need to.

There are two ways to protest your property taxes: hiring a company or doing it yourself. If you hire a company, they will take a percentage, so I’m going to give you a few tips on doing it yourself.
When you get the letter in the mail, you will send it back after checking to make sure you feel your property is over market value and that it’s not equivalent to other properties. If you only check one box, you can only protest under that pretense.
You also want to get a package from the county that shows what they will use against you. Do your research and find out what properties they will use to hold up their argument that your property is worth what was stated in the letter. They may use properties that are in a better location or that you know are worth more because of the age or updates. The more you know, the better prepared you’ll be.
If there is anything wrong with your property, take pictures. Some issues may be an old A/C unit, old roof, or anything that will help you determine that your home value is a little bit less. Make sure you take film photos instead of digital photos so you can physically present the pictures.

The more you know, the better prepared you’ll be.

If you go to a formal hearing, bring five copies of your package with you. You’ll need three for the people representing the county, one to submit to the Harris County Appraisal District, and one for yourself. You also want to bring a satellite photo. If your property is on a busy street or backs up to a commercial property, the satellite photo will show that it’s in a worse location. Make sure you research the tax value of a home in your neighborhood and on your street. Are they of equal value? Are they being assessed the same? If they’re not, why not?

Additionally, wait until closer to the end of your protest time to submit your papers. If you submit your papers too early, you won’t have the chance to go and see if other properties similar to yours in your neighborhood have been reduced in value. This is a great year to protest taxes, so if you have any questions, please feel free to reach out to me. I’m always happy to help.