Living In Pike.com

If you are on the fence this year about buying a home, don’t forget about this very popular Tax Credit that the government is giving. It ends November 30th 2009. Rumor has it that it might be extended BUT my guess would be that prices won’t be as good as they are right now. For details about the credit, here is the tax form 5405.

Want to go to a seminar and learn more? Click here.

Note: Please talk to your tax consultant, tax preparer or tax attorney for details. I am only a very good Realtor that knows about the program and not a tax expert.

Yesterday I had time to go look at 2 interesting properties that caught my eyes on the BLC (Brokers Listing Cooperative). Everyday I get reports showing me new and changed listings in Pike Township and these had just come up.

6430 Cotton Creek Court – This property is located in the community of West 86th Street. What caught my eye was the price which was $259,900. Typically prices in West 86th Street range from $500,000 to over $1,000,000. This property is bank owned and was just listed. When I arrived to preview it, there was a workman there. My first clue. After asking him 20 questions it seems that the finished basement had flooded with 4 feet of water. He did not know how long it had sat like that. He had just pumped out all the water. I went downstairs and looked. It was a mess. You could see the water marks up the sides of the walls and how it had damaged the drywall. Mold was beginning to take over in some spots. My first thoughts were that it would cost $50,000 to put it back in marketable condition. The rest of the house was in good condition with a few minor cosmetic problems. When I got back to the office, I looked at the listing again. They had attached a bid which showed what they were going to fix. It was just going to gut the basement and take out all the mold among a few other related things. The total cost of the bill was under $14,000. Amazing…although you could buy the house “as is” right now, you could probably wait until the work was done and buy it at the same price or maybe $14,000 more. You would get an unfinished basement which could be finished. Anyway you look at it somebody will get a good deal in my opinion.

6054 Hollingsworth Road – Most people think of Hollingsworth as the main street through Crooked Creek Villages. There is another Hollingsworth just west of Georgetown Road between 62nd and 59th. That is where this house is located. It is also bank owned and just listed. I had know of this house for years. It had been at one time a Bed and Breakfast. During 2003 it had been up for sale at $689,000. Now it was up for sale at $270,000. That is what caught my eye. The other thing about this property had been that the owner a couple of years ago wanted to split up the 4.16 acres and re-plot it. He wanted to be able to sell the plots and let the buyers build on it. This never happened. Now it sits empty. I had wanted for years to see the property and never had the chance. Now was my chance. First off, it is the oldest property (built in 1854) that I have ever seen in Pike Township. It has a stately curb appeal and all in brick painted white. There are several out buildings including a 2 car garage (looks like storage barns) with what looks like a living area attached. In the back yard there is also another building that looks like a living area. Away from the main house is another barn. When I walked in the front door the first thing I noticed was the odd looking floor. It was a hard wood floor but not put together well. There was a bedroom off the living room with full bath. There were other large rooms on the first floor that were either sitting rooms or dining areas. There was a good size kitchen that had been updated but in my standards, not well. It did not seem efficient and there were exposed venting toward the ceiling. Upstairs there were 4 bedrooms, 3 with full baths and one with door leading to a common bathroom (door from hall). There also was a good size laundry room upstairs. There was a good size unfinished basement but I only made it to the bottom of the basement steps. None of the floors in the house were level (did not expect a house built in 1854 to now have level floors). It will be interesting to see what this house sells for and what it will be used for in the future.

As of May 1st, 2009 the Home Valuation Code of Conduct (HVCC) went into effect.

The New York State Attorney General Andrew Cuomo in 2007 filed a lawsuit against eAppraisalIT and its parent, First American, for caving in to Washington Mutual, which allegedly pressured appraisers to submit so-called inflated appraisals. As a result of the lawsuit, Fannie Mae and Freddie Mac, the largest purchasers of home mortgage loans in th United States elected to adopt the Home Valuation Code of Conduct. It does not affect FHA loans.

The rules of the HVCC say that individual banks and mortgage brokers who sell conventional loans in the secondary market to Fannie Mae and Freddie Mac cannot hand-select their own appraisers anymore. They must let an appraisal management company pluck an appraiser from its pool of appraisers to do an appraisal.

The HVCC rules are meant to stop collusion between lending institutions and appraisers. However well meaning, the Home Valuation Code of Conduct, according to me and many other professionals in the real estate business, has backfired. In an attempt to thwart inflated home values, which constituted a small portion of the appraisal market, the HVCC has instead caused chaos and messed up the entire appraisal process for many conventional borrowers.

How will this affect Pike home buyers and sellers?

Out-of-Area Appraisers Are Performing Appraisals – Do you think a Bloomington IN appraiser would do as good as a job as a north side Indianapolis appraiser could do? Do you think they will know the area?

Appraisers With Less Experience Are Performing Appraisals – The experienced and mature appraisers are quitting the business or retiring early. Because they have to give up 40 to 60 percent of their fees to the agency they work for, they would have to do double the work just to be where they are today. Hence the new appraisers are getting the work.

Experienced Appraisers Are Going Out of Business – The thing about experienced appraisers is they have most likely been inside the homes in the neighborhoods where they are asked to appraise. They know why a home on one side of a physical boundary may have a higher market value than a home on the other side. They count on repeat business. When that source of business dries up, they have no job and their expertise is worthless.

Transactions are Falling Apart Because Appraisals Are Too Low – Appraisers who don’t know the neighborhood or have little experience are far more likely to produce an under-valued appraisal. When an appraisal comes in less than the sales price, many sellers refuse to negotiate and buyers don’t want to make up the difference. So the pending sale blows up. The seller loses the buyer and the buyer loses the home.

The Consumer Pays an Increased Cost for the Appraisal – There is no free lunch. Because the appraisal management company that selects the appraisers must be paid, consumers bear the cost. Part of the appraisal fee goes to the appraisal management company with the balance to the appraiser. Somebody has to pay the fee to the appraisal management company which could be as high as 60 percent. I suspect appraiser fees which now are in the $300 to $400 range will soon go up.

PERSONALLY I have not been affected by the HVCC as of yet. I have heard stories within my company. In the past I have been called on by appraisers asking general questions. The HVCC now makes it questionable to talk to a Realtor involved in the transaction.