The Biden Administration Confronts Racial Bias in Appraisals

Happy family gathered in a kitchen preparing food. Captioned: Administration Confronts Racial Bias in Appraisals

Black-owned homes are regularly low-balled in appraisals. It’s been happening for generations. Now, the Biden administration is confronting the issue.

On June 1, 2021, the president said a new task force will deal with race-associated disparities in home appraisals. Housing and Urban Development (HUD) Secretary Marcia Fudge will lead the team as it embarks on a thorough review of current appraisal methods and outcomes, and as potential remedies are considered.

The task force will consist of a large group of agencies and financial groups, encompassing the Federal Reserve, Freddie Mac and Fannie Mae, the Consumer Financial Protection Bureau, and a host of financial groups. It will seek information and guidance, too, from civil rights nonprofits as well as the appraisal industry and its state-based regulators.

Continue reading “The Biden Administration Confronts Racial Bias in Appraisals”

Selling Your Home? A Few Things to Know About Listing Agreements

Image of legal documents being offered for signature from one person to another person seated at a table. Captioned: Selling Your Home? A Few Things to Know About Listing Agreements

You start off the marketing and sale of your home with a listing agreement. This document controls all the terms of the sale. It sets the keynote for a string of important decisions and legal agreements.

In this article, we’ll discuss some recent news about listing agreements, as well as the broad-brush concepts every seller must know. First, we look at some sales tactics to look out for before you even think of selling. Then, we’ll explore how to understand the terms of the agreement you’ll sign when you’re ready.

Continue reading “Selling Your Home? A Few Things to Know About Listing Agreements”

Buying a Floating Home? Here’s How to Plan Your Purchase.

Image of a floating house on the water. Captioned: Buying a Floating Home? Here’s How to Plan Your Purchase.

Floating homes are hallmarks of many coastal and riverside cities. There are also amphibious houses — built on land, but capable of rising up off the ground when storm waters rush in. Flexible utility pipes move to meet the water as its ebbs and flows.

Putting homes over water serves to expand the available real estate and can help keep prices down. The waterside lifestyle also appeals to those who’d like to get away from the city hustle and live where they play. Not surprisingly, interest in this type of construction is growing. We might even say it’s buoyant!

Continue reading “Buying a Floating Home? Here’s How to Plan Your Purchase.”

Solving the Affordability Problem

Can Deed Restrictions Include Rather Than Exclude?

Image of the outside of a row of condominiums. Captioned: Solving the Affordability Problem

U.S. home prices have outpaced U.S. employees’ wages. This creates a number of problems in real estate. For one, it shuts a lot of people out of the market. Most of today’s renters simply have no choice but to keep on renting. And whether they rent or own, many employees find themselves in long-distance commutes, because they cannot afford to live anywhere near their workplaces.

Landlords are increasing rents sharply these days. Consider Phoenix. Rents in all Phoenix suburbs have risen “by the double-digit percentages since the pandemic,” Zumper reports. Meanwhile, many residential areas throughout the United States have single-family-only zoning. Building affordable, multi-unit homes on a property is not allowed in those areas.

Every day, stock market commentators say we dodged the financial bullet when we powered through the pandemic by Zoom, Teams, and DocuSign. Yet many still struggle to afford homes. How can the affordability problem be solved?

Continue reading “Solving the Affordability Problem”

Navigating the Home Appraisal: A Buyer’s Guide

You’ve put in your bid for the home you want. Now you await the appraiser’s report. What’s going on behind the scenes?

How the Appraisal Works in Most Cases

Image of reading glasses and cash sitting on top of a clipboard holding appraisal paperwork. Captioned: How the appraisal works in most cases

The typical home appraisal relies mainly on local sales comparisons, or comps. What will other buyers pay now for a house like the one you’re buying? Whatever price others will pay for similar homes is roughly the value of your new home.

What’s a similar home? The appraiser considers homes within a certain radius of the one you’re buying, with comparable bedroom and bathroom counts, the same or similar size and construction type. Comparable homes have the same school district or a similarly ranked school district, and similar amenities nearby. The appraiser studies and compares sales information and recorded documents for the homes. Homes sold in the last three months are considered the most relevant comparisons.

Even similar properties are unique homes, of course. Therefore, the appraiser will find enough variety in the data to come up with a range of reasonable valuations. Some comparable properties might have been sold for more than the market value, others at below-normal prices, and so forth. Once the outliers are understood for what they are, an appraiser needs to figure out where your desired house fits among slightly more and slightly less costly properties.

The expert’s professional discretion explains why, many times, the appraisal will come back with a valuation very close to the price you offered and the seller has accepted. As long as your agreed-upon purchase price falls within the data-supported range of value calculated by the appraiser, a buyer usually gets an appraisal that matches what the buyer and seller think the home is worth.

Continue reading “Navigating the Home Appraisal: A Buyer’s Guide”

Selling Your Home As-Is? Here’s What You Should Know

A person working on a light hanging from the ceiling. Captioned: What you should know about selling your home as-is

Is the hot seller’s market of Summer 2021 tempting you to put your home on the market and watch the offers roll in? To get ready quickly, you might wonder if you should put a clause in your contract to announce you’re selling the house as-is.

A seller may use the term as-is to point out that the house isn’t in pristine condition. The unspoken message? The home is available at a discount to those who’ll upgrade it themselves. In other words, as-is hints to buyers: Please don’t come back after the inspection to request repairs, replacements, and price concessions!

But you can always speak with your agent about contractual language that limits the buyer’s leverage in an inspection contingency. Selling the home as-is adds vagueness to the transaction, and might not be your best strategy.

Let’s flesh this out with some general considerations for sellers.

Continue reading “Selling Your Home As-Is? Here’s What You Should Know”

Own Without Remorse: Six Questions to Ask Yourself Before Buying a Home

A person in deep thought leaning on a stair rail. Captioned: Own Without Remorse, six questions to ask before buying real estate

Hindsight is 20-20 vision. Homeowners learn something from each home they buy. Looking back, most homeowners can tell you what they did well — and a few things they could have done better. So, what can’t-miss items need your attention before you buy?

We’ve said it before. There’s no overstating the power of a great real estate agent and a diligent mortgage specialist. Their combined know-how can guide you through every step.

Still, you’ll want to keep your own eyes open. Without further ado, here are 6 questions to ask yourself when preparing to buy a home.  

Continue reading “Own Without Remorse: Six Questions to Ask Yourself Before Buying a Home”

Should You Get an Adjustable-Rate Mortgage? Here Are 6 Reasons You Might

A person sitting outside looking at and typing on a laptop computer. Captioned: Should You Get an Adjustable-Rate Mortgage?

When it’s time to meet with their mortgage experts and apply for loans, most home shoppers accept mortgages with fixed interest rates. When they do, the interest rates are locked in throughout the life of their loans. That’s a good thing, of course, if interest rates are low when the buyers get their loans.

Adjustable-rate mortgages (ARMs) can seem complex and unpredictable by comparison. At its outset, the common “hybrid” adjustable-rate mortgage starts with a low, fixed teaser rate that the borrower keeps for a certain period — normally three, five, seven, or ten years. Then, it becomes adjustable.

After the initial, fixed-rate period, the payment is recalibrated based on the current interest rates and following the terms set out in the mortgage. Often this is done annually. An ARM could be written as 5/1, for example, meaning the borrower enjoys a low, fixed rate for a five-year period, and after that, mortgage payments will be adjusted every year. So, a borrower who goes to the adjustable rate has to make higher or lower monthly payments as interest rates fluctuate.

An adjustable-rate mortgage typically puts a limit (cap) on the homeowner’s payment increases. Nevertheless, there’s an element of risk in a variable rate. It’s possible that the borrower will have to make much larger monthly payments in later years.

Let’s turn to why some home buyers choose adjustable-rate loans despite this risk.

Continue reading “Should You Get an Adjustable-Rate Mortgage? Here Are 6 Reasons You Might”