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.
In order to property evaluate a property for appraisal, the appraiser should know everything possible about it. This often includes an "inspection" of the subject property. Inspection can be a misleading term, but it's the most appropriate term for what we do. When we inspect the property, we are concerning ourselves with the relevant characteristics that affect the value. This includes just about everything we can see or observe, and that's where the buck stops for appraisers and the door opens for Property Inspectors. Appraisers are concerned with what items the property has, the apparent condition of the item and the quality of the item - a property inspector is only concerned if the item works. The appraiser assumes that the item works unless told otherwise.
So if we're in the kitchen, I am going to see if there is a dishwasher, and the dishwasher appears to be in working order, and if the dishwasher is a typical make and model for the neighborhood. But I never turn on the dishwasher to see if it is working properly. That is the job of the property inspector.
I once had a homeowner call me back to a property 6 months after the appraisal to see if the property had been damaged in the time after the appraisal. This was a divorce case, and his wife was occupying the property during the first appraisal. Now he was about to take possession, and he suspected his wife of pouring concrete down the toilet drains and other destructive things. I gladly did the inspection, but I did not flush the toilets because that just wasn't standard procedure in the first appraisal. My damage report was limited to the items I observed the first time.
There is an exception for FHA appraisals. The HUD requires us do to a cursory inspection for certain items. I call this a "common sense" inspection because it is items that a prudent buyer should have done already. FHA inspection items are to check the hot and cold air flow, hot water, water pressure, flush toilets, check for leaks under sinks, garage door safety stop, electrical outlets and lights, any item damaged or missing that affects the safety, sanitation or habitation of the dwelling.
The 2007 mortgage mess brought the ugly truth to the American public that no one was immune from the possibility of declining markets. For all the Chicken Little reporting of the Dallas Morning News, I believe the silver lining of this dark cloud is that finally North Texas homeowners have embraced the reality that their property values don't always increase every year. For years we have become comfortable in the fact that our property values would grow, if only slightly.
Declining markets have always been on appraisers' minds, however. Every appraiser that completes a FNMA 1004 URAR has to check the Market Area box as Increasing, Stable or Declining. Some appraisers just check Stable to make things easy. But then in July of 2007 Fannie Mae announced that it had compiled it's own list of declining markets, and appraisers now had to really pay attention to their own research. Since then, I have included in the report a statistical table which actually shows the trends and how I derived my conclusion (does your appraiser do that?). In the past, to check the box "Declining" was almost a killer for the mortgage and usually raised a ruckus with everybody involved. Now, I can check that Declining box without fear of reprisal because lenders, Realtors and homeowners realize that declining markets really do exist in North Texas. Readers of the appraisal generally accept this at face value thanks to all the hoopla created by the media. And I think the Lenders that still do business in declining markets (FNMA, FHA, etc) and getting the word out that this factor, if present, is a workable variable.
Overall, I've found this year that the declining markets exist exactly where you expect them to be. For the most part, North Texas is stable. In Carrollton, for example, the median home price has increased a mere 3% in the past 3 years, and increased 8% in the past 5 years. It's been interesting to see where the recent "hot" areas have now stabilized. And yes, some parts of town are still increasing (such as at Hillcrest & Forest in North Dallas).
Contact Us | Home | The Crosstown Blog
Copyright © 2010 Crosstown AppraisalsPortions Copyright © 2010 a la mode, inc.Another XSite by a la mode, inc. | Terms of Use| Site Map
