Patty McMillen's Blog

           After four years of declines, home sales on a national basis finally appear to be turning around. Closed sales, which have risen three straight months, and pending contracts, up for five straight months, are at levels above normal spring and summer increases.

            First time buyers in particular have stepped up to take advantage of deeply discounted prices, low mortgage rates, and the buyer tax credit. In a few markets, the rebound has been quite heated, with sales doubling from year-ago levels. In some cases there’s even multiple bidding – though mostly over foreclosed and other distressed properties. Nonetheless, it’s clear that buyers are returning.

            What’s more, home prices and mortgage payments in relation to income are comfortably below historical levels, at least in many markets. That suggests home prices have overcorrected downward. Some markets, as a result, could experience a snap back in home prices, with price gains in the high single digits or low double digits, compared with historical average annual price appreciation of 4 percent.

            Still, the housing market is far from being out of the doldrums. The economic rebound will be one of the most tepid we’ve ever seen. Consumers are being extra cautious, saving more to pump up their depleted retirement accounts. The unemployment rate in 2010 is expected to be at around 10 percent. The federal budget deficit will force up mortgage rates next year, though not alarmingly.

            But because consumers’ view of home values is fundamentally changing, the momentum of rising home sales will likely continue in 210. Buyers are no longer hesitant about home purchases on the fear of further price declines. And that sets the stage for a steady release of pent-up housing demand.

Lawrence Yun – Chief economist of the National association of Realtors. . September 2009

Dear Editor:

Getting appraisals for properties continues to be an exhausting process that neither the buyer nor the seller can be adequately prepared for (though I continue to try).

A recent example was a property that is tucked away in a lovely but tiny little subdivision isolated from the surrounding homes. This subdivision has one or two sales per year, with homes ranging in size from 1,500 square feet to 8,000 square feet.

The lending company wanted three comparables within a mile. The deal fell apart and the next buyers (much to my seller’s delight) offered them $5,000 more, and our local appraiser had no problems with the value. Knowing when to prepare your client for this “numbers game” is difficult, as the explanations will more than likely confuse them if given in cases where we don’t have problems.

Chris Tesch
Realtor

Article pulled from inman News, PM Edition

“Full cash value” or “fair market value” means the amount of cash or its equivalent that property would bring if exposed for sale in the open market under conditions in which neither buyer nor seller could take advantage of the exigencies of the other, and both the buyer and the seller have knowledge of all of the uses and purposes to which the property is adapted and for which it is capable of being used, and of the enforceable restrictions upon those uses and purposes.

For purposes of determining the “full cash value” or fair market value” of real property, other than possessory interests, being appraised upon a purchase, “full cash value” or “fair market value” is the purchase price paid in the transaction unless it is established by a preponderance of the evidence that the real property would not have transferred for that purchase price in an open market transaction. The purchase price shall, however, be rebuttably presumed to be the “full cash value” or “fair market value” if the terms of the transaction were negotiated at arms length between a knowledgeable transferor and transferee neither of which could take advantage of the exigencies of the other.

Excerpt from The Revenue and Taxation Code