Wednesday, May 20, 2009

South Land Park Terrace Sellers & Refinancers - your neighborhood finally has a comp (and you're welcome!)!

I am not ashamed to admit that yesterday I did a little "happy dance" when I learned from Placer Title that one of my transactions went on record (closed escrow).

To set the stage...I was the listing agent for a really nice property in South Land Park Terrace...this was one of my few non-short sale listings. If you are not familiar with South Land Park Terrace, it is a neighborhood just to the south of William Land Park / Sutterville Road. The homes were built primarily in the 1940's - 1960's and are generally ranch style...a much different look and feel than their neighbor to the north, Land Park. Being geographically so close together, they have do some neighborhood amenities in common, however values and market trends are a bit dissimilar.

Anyway, we were able to get the property into contract with a buyer...however there were literally no "like kind" recent sales in South Land Park Terrace within the last 90 days. Like kind comps are a key component of what an appraiser needs to justify the value of the property for the buyer's lender, so the buyer can obtain financing for the purchase. In fact, the highest sale in the last 90 days in SLPT was $335,000. That home was on a relatively busy street, was in inferior condition, and was over 500 square feet smaller. Not at all of "like kind" to my listing, which was in contract for $485,000, superior condition, superior location, and much larger.

UGH...if ya'll have been reading my blog for a while, you will know that appraisals in general have been really hairy lately. Not only have the processes for ordering appraisals for most types of transactions changed recently (thanks to the HVCC, which is crappy legislation by the way), but appraisals live and die by the comparables used, and are subject to review and generaly beating up and re-valuing by the loan underwriter.

Needless to say, all parties -- listing agent, buyer's agent, buyer, and seller -- involved in this transaction were really sweating the outcome of the appraisal because although we all knew the value of this property was indeed the contract price of the property, we had very little proof. The most recent like kind comps sold back in September 2008.

By some act of god, the appraiser assigned to this file was familiar with the area. He used the most appropriate comps he could find (went to comparable outside neighborhoods), made the appropriate monetary value adjustments, and wrote LOTS of narrative comments justifying the value of the house. When the appraisal report was received by the lender, it came in at the contract price!

Ok...that was the first hurdle - next we had to get that appraisal through the fine toothed comb of the underwriter. If ya'll remember, in one of my past transactions this year, an underwriter used Zillow to second-guess the value of an appraisal. So the underwriter reviewed the file, and did not question the value assigned by the appraiser!!! Loan documents were drawn and sent to Placer Title! the end result - we closed escrow yesterday! I was sitting in a committee meeting at the Sacramento Association of Realtors when I received the email from escrow that the transaction was officially on record. I got high-fives from others sitting at the table!

Want to know another little tid-bit? During the escrow, I received calls from three separate agents, engaged in three separate transactions, wanting to know if we had any appraisal issues and when our close of escrow was scheduled...they were not so fortunate to have a local and knowledgeable appraiser assigned to their transactions. They desperately needed my listing to close so they could use it as a comp. Any potential refinancing in that neighborhood will likely benefit from this comp too. I wish them all well.

No comments: