Austin Real Estate Blog

You can listent to a former CBS anchor and Austinite in the know… Neil Spelce. From the Neil Spelce Austin Letter….

Volume 31, Number 12

June 19, 2009

Dear Client:

One of the least-discussed aspects of getting a home loan is becoming an impediment to an efficient closing of a home sale in the Austin area between a willing seller and a willing buyer.

This scenario is being replicated daily in the Austin area: A home seller and a home buyer go through the normal negotiations and agree on a price. The home buyer is pre-approved for a loan to cover the purchase. The home is inspected and the seller and buyer once again agree to make the deal. The lender requires a 3^rd-party appraisal. All well and good, so far. But the appraisal process is turning out to be a big hitch in the closing process.

Appraisals in and of themselves are a good thing. But the process is causing real problems for Austin buyers and sellers. It ratcheted up to a new level 5/1/09, when a new national Home Valuation Code was adopted. The Code bars loan officers, mortgage brokers or real estate agents from any role in selecting appraisers for mortgages that will be owned or guaranteed by Fannie Mae and Freddie Mac

As a result, many lenders are outsourcing the selection to appraisal-management companies (that take a big slice of the appraisal fee). Some companies put appraisers under pressure to do it faster and do it cheaper. Experienced appraisers are turning down requests to pay them only 50% to 70% of their fees and may also include a requirement the appraisal be completed in as little as 48 hours.

This process has resulted in such anomalies as appraisers being hired from outside Travis County to conduct appraisals in neighborhoods they don’t know very well. The end result: less accuracy and certainty about a property’s true value.

And no one can discuss the appraisal with the appraiser under this new Code.

Anecdotally, you can find examples where some of these appraisals are challenged regularly. (No hard numbers are available) Home values differ from neighborhood to neighborhood, street-by-street. And in many cases no current comparable sales exist. This is where an appraiser who knows the area can more accurately appraise the home’s true value – more so than an appraiser from out-of-area who is charged with doing a “quick” turnaround.

This causes a number of problems, including the possibility a buyer must seek another appraisal. It is slowing sales and as the sales pace picks up, the problems may increase.

Ok. check my post previously where one of my clients got rogered… HVCC rant I hate to say it, but, “I told you so.”

joe

United States new home sales numbers have continued to increase between May and June. The numbers made available by the US Commerce Department appear to reflect a market recovery.

Between May and June the sales of single family homes increased 11 percent alone. This jump indicates a third consecutive increase, and surpasses the anticipated increase of 2.3 percent by many economists. This particular jump holds additional significance. Home sales have not made a significant increase of this nature since Dec. 2000, 8.5 years ago.

Additional positive news for the housing industry can be found in re-sales that posted an increase of 3.6 percent for the month of June. This puts the housing market in a more stable up swing than previous projection. This can be found in a report from the National Association of Realtors.

In the Austin area more than 2100 single family homes sold in June. This is actually down 4 percent from June of the previous year. According to a report from the Austin Board of Realtors, the year over year sales volume gap is decreasing every month, making Austin a steadier housing market then the majority of the country. The median price has remained the same, just under 200 thousand dollars, when comparing the same month in both years.

Overall, Austin sales volume is also increasing. The housing sales market report of this area indicates that sales have increased 61 percent since the onset of 2009.

Once again this proves the housing market in Central Texas is one of the most prolific.

As companies downsize their budgets, commercial loans have defaulted by more than double over the last year. It is currently at 7% which is double the default rate from the previous year, but that does not stop there, the rate increases will harm small and regional sized banks. As the commercial side of mortgage loans defaults, the smaller banks find larger gaps to fill. Today it is nearly impossible to obtain a new commercial loan.

New construction options have been limited by lack of funding and many businesses are foregoing the commercial ownership prospects. This creates other options. For many businesses who are not ready to buy have options to rent, and finding a prime location that is available in their budget. This enables expansion options, even in an otherwise difficult market.

For companies who are ready to buy, with minimal or no loan, this is the time to do it. There will be no better time to find a deal on a commercial property, and there is no better city than Austin. Contact Joe Cline today to get started finding the best location for your business and budget.

A real estate appraisal is the determination of the value of a property. This is based the best use of the real estate property, translating into the fair market value of the property. The person who executes this is a real estate appraiser. The value determined by this appraiser is considered the fair market value of the property. This affects not only the value of your home but also the value of every home in your neighborhood, thus having a proper evaluation done is crucial.

The real estate appraisal is done by using several different methods of comparison. Taking accurate measurements of the property to be assessed and comparing it to the other local prosperities with similar dimensions and amenities. A proper appraisal will also assign two values to the same property. The first is improved value, typically when someone maintains and improves upon the property and vacant value, when it is left vacant and available for use. This appraisal is most applicable for use with pricing a home or property for sale, however if an investor is evaluating the property it would be of little use to him.

The investor gauges the property based on developments and activities around the location. This allows the investor to note where the housing and commercial market is at present and enables them to forecast where it will be in 2 or 5 years when they are prepared to get a return on the investment.

The best method of determining what you will need will be to ascertain what kind of approach you have to the property. If you are buying it to live as your primary residence your appraiser’s results will be crucial to the buying and selling process. If you plan to use this property to rent or flip and sell, or just sell out right, you are an investor and should approach the research of the home appropriately. Your real estate agent can point you in the right direction for your needs.

This message is to alert you to changes in the federal Truth-in-Lending Act regulations, which will have an impact to every mortgage provider.  It will require a fundamental change to how we finalize loan terms for the borrower prior to closing. Changes at the closing table could require the borrower to reschedule the closing date if a revised Truth-In-Lending (TIL) is needed.

The rules for the Mortgage Disclosure Improvement Act were finalized Friday, May 8^th, and it is applicable to all mortgage lenders (federally chartered or state licensed).  For applications taken as of July 30, 2009, new requirements about the delivery and the accuracy of disclosures will apply.  One of the new requirements is that the borrower must be provided with an accurate APR disclosure at least three business days prior to closing.

Remember the new rule with “3/7/3”

3 days after application – An initial Truth-In-Lending (TIL) statement must be provided no later than 3 business days after receipt of the loan application.  Our current process generates an auto-compliance package that complies with this requirement, so no changes are needed.

7 business days after initial application – Waiting period – the borrower is not permitted to close until at least seven business days have passed since the TIL was placed in the mail or provided to the borrower.

3 business days prior to closing – Waiting period – the borrower must receive an accurate APR on their TIL at least 3 business days prior to closing. If it was provided before that period of time, because the loan terms were locked in earlier in the process, no new TIL is required if there is no change to the APR or the change is less than 1/8th of a percent.

If the final loan terms cause the TIL / APR to be understated by more than 1/8th of a percent, a revised TIL with an accurate APR must be provided to the borrower so that they receive it at least three business days prior to closing. It must be in their hands at that time, and they may close on the 3rd business day after that day.

What this means to you? All Realtors and buyers need to be advised of these new timing requirements, which will limit rush closings and could even delay closings.

1. Affordability is available at the moment. Austin home prices have remained constant regardless of the national results. There is no reason to consider they will lose considerable value.

2. There is a huge selection available.

3. Historically low Mortgage rates are beginning to climb. This effects your monthly budget.

4. Federal Tax Credit, developed and launched by the American Recovery and Reinvestment Act of 2009, allows for qualified buyers to receive up to 8000 dollars credit.