According to ApplianceMagazine.com, here's the latest rundown:
Central Air Conditioner....11 years
Window Air Conditioner....9 years
Trash Compactor....6 years
Dishwasher....10 years
Electric or Gas Dryer....12 years
Washer....11 years
Garbage Disposal....9 years
Heat Pump....12 years
Microwave....9 years
Electric Range....16 years
Gas Range....17 years
Refrigerator....12 years
Electric Water Heater....13 years
Gas Water Heater....11 years
When I pull out my old list from 2006, decreases are noted in HVAC, the fridge and the washer; and only the dryer appears to have increased its longevity. Why does the appraiser need to put this useful information in a file folder? When an appraisal is completed on a rental property, the lender usually wants an analysis about the income-generating ability of the property (since that's usually part of the borrower's financial picture). Just like appraising the value of the property, a market rent for the property is also determined by comparing our house to others that are currently rented. In the final step, a monthly cash-flow is determined and part of the expenses are reserve amounts set aside for appliance replacement. So if your $1200 Kenmore fridge only last 12 years, then $8.30 is deducted from the monthly rent as part of the reserve replacement expense. Ultimately, after making deductions for other appliances, household systems, mortgage, insurance, etc., then the monthly cash-flow is revealed.
Does this mean that your property is now going to appraise for 4.3% less than last year? There is a chance, but probably not. This is a county-wide average, so some market areas do better than others. Addison is down 7.6%, Carrollton is down 4%, Highland Park down 3%, Sunnyvale up 1.5%. Here's an insider secret: what happens in Sunnyvale has nothing to do with what happens in Highland Park. As long as the three most important thing about real estate ares location, location and location, the overall averages that make-up the headlines can only serve one, but very big purpose: it plants the seed in the homeowner's mind that there property may have declined by 4.3%. This makes things so much easier for the appraiser who comes along and appraises it for less than they bought it. Typically, North Texans have been spoiled from about 1992 through 2007 that there property value would inch-up every year. Dare an appraiser check the box "declining market" and there would usually be a ruckus with the homeowner, Realtor and loan officer (never mind that plenty of lenders have always made loans in declining markets). All the doom and gloom in the DMN over the past two years has enlightened real estate professionals and homeowners alike that the price of real estate changes every day - for better and for worse. Thanks, Steve!
PS: The municipal winner of the 2009 to 2010 change was Hutchins, up 14.4%. This does not mean that your $100,000 house in 2009 is now worth $114,000. The statistic reflects the change in averages; so, your old $80,000 house built in 1975 is now paired with a newly-constructed $110,000 house. Where the average used to be $80,000, it's now $95,000; hence, a 14% increase in the overall value.
Does this headline or advertisement appear in Friday's Real Estate section every week? Seems like it. Let's see what they're saying:
07/17/10: Dallas Morning News: Record low mortgage rates attract buyers (Nationwide average) 30yr Conv. FRM 4.58%, 15yr Conv. FRM 4.04%
07/23/10: Dallas Morning News: 30-yr fixed rate hits record low of 4.56% (Nationwide average) 30yr Conv. FRM 4.56%, 15yr Conv. FRM 4.03%
08/06/2010: Dallas Morning News: Mortage rates dip below 4% (Nationwide average) 30yr Conv. FRM 4.49%, 15yr Conv. FRM 3.95%
08/13/2010: Dallas Morning News: 30-year rates at another modern low (Nationwide average) 30yr Conv. FRM 4.44%; 15yr Conv. FRM 3.92%
08/20/2010: Dallas Morning News: Mortgage rates drop once again (Nationwide average) 30yr Conv. FRM 4.42%; 15yr Conv. FRM 3.90%
08/27/2010: Dallas Morning News: Mortgage rates drop even further (Nationwide average) 30yr Conv. FRM 4.36%; 15yr Conv. FRM 3.86%
09/03/10: Dallas Morning News: 30-, 15-year mortage rates decline to record lows (Nationwide average) 30yr Conv. FRM 4.32%; 15yr. Conv. FRM 3.83%
10/01/10: Dallas Morning News: Mortgage rates are down again (Nationwide average) 30yr Conv. FRM 4.32%; 15yr Conv. FRM 3.75%
10/08/10: Dallas Morning News: 30-yr rates fall to lowest since 71 (Nationwide average) 30yr Conv. FRM 4.27%
re: Dallas Morning News: Rigid HOA standards defended, criticized
I thought the arbitrary foolishness of the Stonebriar HOA's definition of a pick-up truck was fairly entertaining, but this article in Sunday's DMN reveals a certain Colleyville HOA's uber-control at the apparent hands of a single individual - the developer. The kicker with all HOA rules is that the homeowners legally agree to them when they purchased the property. What makes this HOA story unique is how these homeowners are not and probably never will be in control of their HOA. They belong to a Developer-Owned Association.
The particular rules of this Colleyville HOA are a mix of good and bad, but it sounds like the overall problem is that the developer, who views his communities as children, doesn't treat the homeowners like adults. Here's a run-down of items mentioned in the article:
Having the developer in sole control of the HOA: Bad. He can, and has, raised dues without the votes of the homeowners. Even to go so far as to levy a special assessment for legal fees. Ironically to fight against the same homeowners suing in court.
Architectural Control Committee: Good. I have seen $1,000 coach lamps that are too small for the house they were hung and they look terrible. Same effect to those that are too big. Does it affect the sale price of the house across the street? No.
Fees to review homeowners' plans: OK. Variable fee: Bad. Repeat fee for repeat submissions after the first rejection: Worse.
Only using the HOA's approved list of contractors: Bad. Price fixing, colusion, etc. obvious. Solution already in place: architectural control committee.
Ability to amend or abolish existing CCR's without homeowner vote: Bad.
Relinquishing HOA control to homeowners after the last lot is sold: Bad. Most I've run across relinquish after a majority percentage. This developer can stay in contol forever now.
Taking months to approve ACC plans: Bad. This is where the developer exhibits his lack of respect for his homeowners. The article cites many examples of unfinished works-in-progress pending some sort of approval.
Having to acquire ACC approval for flower beds in the back yard: Bad. It's behind the fence!
Help is on the way for the Westmont HOA, recently relinquished to Paul Kramer of Castlegate Homes. Paul intends to maintain the uber-high standards of the ACC, but sounds like he also intends to restore respect between the HOA and homeowners by streamlining the approval processes. I did some appraisals for Paul many years ago in Colleyville and Vaquero (the kind of homes so awesome you'd never forget). Paul was a nice guy with very good taste - although I'm still undecided about Jenny's house.
Moral of the story: HOA's are usually fine. But I think many people just assume that the HOA will be just like most HOA's, perfectly amicable, and don't read the 40-page CCR presented at their closing table. But then later discover, after it's too late - au scheisse!
The county tax record does not classify properties as Rural, Suburban or Urban. This designation is left up to the appraiser’s judgment. The issue is complicated by the fact that Fannie Mae has no definitions for these three words. Thus, this is one of the most debated topics in appraisal classes.
For example, a home on 10 acres can be located in an unincorporated part of Collin County north of Frisco but south of 380 and have a Frisco mailing address, located in the Prosper ISD, have a septic sewer and the owners work in McKinney. The arguments can be made for both Rural and Suburban based on location, proximity to major employment, view, and surrounding land use, septic vs. public sewer, distance to nearest Dairy Queen, etc.
However, I do not know any appraisers that would not label a property inside the Frisco, Prosper or McKinney city limits as anything other than Suburban. Also, land size alone does not automatically determine a designation.
Rural is probably the designation that I have used least often. I usually designate a property Rural when on the fringes of the outlying counties, on unincorporated land with vacant (agriculture) being the predominant surrounding land use. It’s usually obvious and rarely contested.
Urban is usually saved for the large metropolitan areas. But even in Dallas my guideline is that inside Loop 12 is Urban, and outside is Suburban. Addison Circle is a nice area but isn't exactly like West Village and Knox-Henderson.
I hear this sometimes:
If you walk out to get the morning paper naked and nobody complains, that’s Urban; if a neighbor complains, that’s Suburban; if nobody can see you, that’s Rural.
This is a work in progress in the collecting data stages - not sure where this is headed. It's a frequent concensus in peer conversation that the Dallas Morning News prints more negative Real Estate headlines than positive. In February I started saving the headlines and keeping score. This will be a running blog entry, so it will change often.
Negative: 28 Positive: 31 Neutral: 3
02/17/2009: D-FW home starts may decrease 20%
02/19/2009: Area's home prices up in study
02/02/2009: D-FW fares better in affordability
02/23/2009: New home sales probably at a low
02/25/2009: Home sales indexes show a mixed bag for North Texas prices
02/26/2009: Existing homes sales sink (US)
02/27/2009: A floodplain of foreclosures
03/04/2009: Luxury home postings see sharpest rise
03/04/2009: Pending sales of existing homes reach a record low (US)
03/05/2009: 21% of Dallas-area borrowers are underwater
03/11/2009: Existing home sales slid 28% last month
03/20/2009: Dallas-area postings approach record level
03/24/2009: February homes sales top January figure (US)
03/23/2009: Survey shows area home-price gain
03/28/2009: First-time homebuyers report burgeoning interest (US)
04/01/2009: Dallas housing prices faring well
04/02/2009: Home prices' risk of falling still low (US)
04/08/2009: New-home sales fell 40% in first quarter
04/17/2009: A 5-year supply depresses prices of empty homes site in D-FW
04/24/2009: Pain spreads across Dallas area
04/29/2009: Dallas home prices fare well in survey
04/29/2009: Property values for '09 slide in Dallas County
05/05/2009: Construction spending, index of pending home sales rise
05/06/2009: Few mortgagors owe more than home's value
05/08/2009: Dallas getting more affordable, report says
05/13/2009: Foreclosure sales drag prices down
05/14/2009: Survey - most think the worst is over (US)
05/19/2009: Sentiment index jumps 2 points (US)
05/20/2009: Area 2nd in new houses
05/20/2009: Home construction see small rebound (US)
05/22/2009: Denton property values inch up
05/27/2009: Index: Area home prices falling faster
05/28/2009: Area home prices edge up in study
05/29/2009: Texas' rate half that of US
06/03/2009: Pending home sales rise 6.7%
06/05/2009: Study says D-FW area undervalued
06/09/2009: North Texas homes sales fall
06/19/2009: Foreclosure listings top record high
06/23/2009: Metro area home prices go retro
06/24/2009: Dallas area ranks high in home price forecast
07/01/2009: April prices fall 5% in year
07/03/2009: Economy putting spec homes in check
07/08/2009: Area home prices face less-precarious future
07/08/2009: North Texas new home sales, starts plunge in 2nd quarter
07/17/2009: Housing recession hits Dallas' heart
07/17/2009: Area foreclosures slip under 5,000
07/18/2009: Home construction jumps in June
07/20/2009: Home sales probably on rise in US
07/24/2009: Pre-owned home sales climb for a third month
07/25/2009: Tax base drops 3.1%
07/28/2009: US Home sales rise for 3rd month
07/28/2009: Economist: Worst of the housing recession in now behind us
07/29/2009: Home prices improve (US)
08/08/2009: Equity outlook improving in D/FW
08/11/2009: Home resale data offers ray of hope
08/13/2009: Area home prices flatten in survey
08/14/2009: Frisco on unfortunate list
08/14/2009: Foreclosures fall, but recovery unclear
08/14/2009: D/FW foreclosure postings climb 35%
08/14/2009: It's risky to say it, but it looks as if the worst is over
08/17/2009: Housing reports may raise hopes
08/18/2009: More homeowners underwater (US)
Last Friday FNMA released Announcement 08-30, which outlined several changes in the way appraisals are to be prepared for mortgage lending purposes.
The most impactful for appraisers will be the introduction of a new page into the appraisal, called a 1004MC. This page is intedended to expand on the appraiser's Market Area Analysis. It seems too often that all of the Neighborhood check boxes are nicely crossed down the middle, and the subject's appraised value is always conveniently near the predominant neighborhood value. The Boundaries and Description comments are always the same for every appraisal, with the fill-in-the-blanks for streets, cities and school districts changed for the appraisal. This is one of many reasons appraisers are always under FNMA's microscope, and I don't blame them.
FNMA has now created a whole page devoted to this topic which is usually hurried and completed with indifference by the appraiser. Ultimately, the goal of this and some other 08-30 revisions are the same as in 2005 when the "new" appraisal forms were released: To make the appraiser do the job they were already supposed to be doing. Instead of having their readers just take their check-boxed conclusions at face value, appraisers will now have to show their statistical analysis that lead to their conclusions. I have already been doing this since July 2007, when FNMA started tracking declining markets for themselves and comparing against the appraiser's conclusions.
Other changes in the Announcement:
The policy changes take effect January 1, 2009; implementation of the 1004MC is April 1, 2009. See the Announcment here:
Wishing you a better 2009!
Clay Bonner - Crosstown Appraisals
I had the unexpected pleasure of attending the Oak Cliff Fall Home Tour last weekend. This annual event has occurred for decades, but this was my first visit. I've been appraising in Kessler Park and Stevens Park since the beginning, so I am well aware and appreciative of the stately grand ol' dames of post-WW1 south Dallas. But this year, tour organizers decided to display a wide variety of styles and designs of homes that comprises the nearly 30 neighborhoods represented by the Old Oak Cliff Conservation League.
Twelve homes were selected from almost 50 applicants, making it the largest tour ever. The homes selected ranged in age from 1912 to 1957, as small as 1,200 sqft. to over 5,000. Styles also ran the gamut from Tudor to Ranch to Modern Contemporary to Prairie Mansion. Most homes had recently completed a significant and thorough renovation and/or rehabilitation, in historic accuracy and/or modern style, or a mix of both. But a couple were just as they always have been - we call these "time warps". Each house also showcased a vintage automobile as a bonus; the 1968 Lamborghini Espada was my favorite.
I highly recommend the tour to everyone. The homes are spectacular, and you will probably come home ready to redecorate. Not to mention the entertainment provided by the voyeuristic comrades touring these home with you. After seeing one fabulous gentlemen for the third time of the day, each time with a drink in his hand, I inquired where the bar was: "In the trunk, sweetie!" But be forewarned for next year, food and drinks are really not allowed - inside, anyway.
www.ooccll.com, www.whhometour.org, www.turnerhouse.org, www.oakcliff.com
One of my most popular questions is how can I increase the value of my house? Thanks to HGTV and TLC, it's almost common sense that improving the kitchen or master bathroom is the most cost-effective remodeling effort. However, patio decks and exterior siding are leading the cost vs. value trends in 2007 and 2008 (both attributed to newly available synthetic building materials). But what if you don't have thousands and thousands of dollars and the appraiser is coming tomorrow?
Here are some basic things any homeowner can do to maximize their appraisal potential:
1) Repair or replace anything that is broken or missing
2) Clean everything inside and out, top to bottom
3) Remove the junk and clutter
The overall idea is to give the appraiser (and buyer, if you are selling) the impression that the property has been taken care of, and don't give the appraiser a reason to withhold or down-grade your value. The house is what it is. This is about making the best out of what you have to work with.
PS: You can put granite counters on your old cabinets, but appraisers and buyers will see it like a pig with lipstick.
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