Archive for March, 2009
Think about why this is true. A good appraisal is the best reassurance that the lender won’t lose its pants on the transaction. If the borrower defaults, the lender still has a marketable property that can be sold to recoup its losses. All of which makes it understandable why lenders are so picky about appraisals. And with recent changes in the industry, the focus by lenders to obtain good appraisals is at the forefront.
Appraisals typically cost anywhere from $350 to $400. However, if the house is gigantic, multi-unit or in the boondocks, it could run more. The cost varies on property type, location and square footage.
The most common type of appraisal is the Uniform Residential Appraisal Report (URAR). It consists of interior and exterior photos and sometimes (depending on the age of the home), a complete cost breakdown of the property and comps (comparison sales of homes nearby that meet the proper criteria). These comps help determine the “market” approach. Each comp sale is adjusted in value when stacked against the home being evaluated (the one you’re buying or refinancing). Usually you will see a comp below the value of your home, in line with the value of your home, and a third above the value of your home. Kind of like the three bears. But if the valuation gets tricky, you can see fourth, fifth and sixth comps. The net value of the comps is estimated based upon the approaches used to come up with the appraised value of your property (meaning the appraiser performs some type of calculation that’s kind of like an average, but not necessarily a true average. Confused yet?)
URARs also, typically but not always, reflect a cost approach, which determines what the value would be based upon what is estimated it would cost to rebuild the home, less depreciation. The final estimated value of the home is then determined by using a melding of the market approach described above and cost approach (if applicable).
Lori Babb, Staff Appraiser for Mortgage Investors Group of Knoxville, TN, further explains comparables. “The best comparables are those similar in size, style (ranch, basement rancher, 2 story, etc.), age, and are close in proximity to the dwelling being appraised,” she explains. “Unique properties will typically require more adjustments than the average properties.”
So, say you’re Bill Gates and want to secure a mortgage on a $200,000 home (I know, it’s ridiculous, but I’m trying to make a point). He’s got the best credit profile a lender could imagine, yet the house appraises for $175,000. Deal or no deal? You better believe it’s no deal. The sales price will have to be lowered, or Mr. Gates will just have to pay cash for his new home (you think he can afford it?). The point is, your average Joe won’t go ahead with the deal without a price adjustment, and he will be obligated to pay for the appraisal regardless of the outcome of value.
Dan Tyrell, principal of Knoxville area’s Tyrell Appraisal Service, Inc., has this comment about value, “When determining value of a single family house, beauty is more than ‘skin deep’. Fresh paint, new carpet, new appliances, and nice landscaping all enhance the marketability of a house. Not so obvious items also impact the appraised value of a house. For instance older houses that have replaced plumbing/electrical systems, updated HVAC systems, newer roofs, replacement windows, etc. lower the effective age of the property which in turn increases the appraised value.”
There are other types of appraisals that are not as common, like an Automated Valuation Model (or AVM). In this case, different factors combine to ensure the value of the home (it’s worth $200K, but your loan amount is only $100K) and your unbelievable credit worthiness (800 credit score!), allowing you to skip purchasing a typical appraisal. You may also only be required to get a “drive by” appraisal, where the appraiser just inspects the exterior of the subject for size, looks at the lot and makes you wonder who that person standing by your mailbox is.
Most lenders control what appraiser is used to determine the value of your home. After all, it’s their money on the line. The appraisal is such an important factor to the mortgage transaction – make sure you’re satisfied with the results. Your lender will make sure it is satisfied!
The current global financial crisis has taken a heavy toll on the construction and real estate sectors the world over. Spending on housing has declined significantly as rising cost of living and loss of jobs dissuade buyers from investing in homes. This scenario has forced many property developers to postpone their projects until the economy and real estate markets improve.
However, developers who are willing and capable to adapt quickly to meet the needs and preferences of the potential home buyers – in cost-effective ways – are likely to succeed despite the recession.
Below are a few tips for minimising home building costs without compromising quality and style.
1. Estimate your home building costs
Estimating your home building costs requires you to have a floor plan. Take time to sketch on paper what you want your house to look like as this gives an idea of how much it will cost. Organise a meeting with architects, builders and suppliers for a budget analysis session. Builders who construct houses similar to the one you envision can provide you with a list of the required materials. They will also let you know how much they charge for house construction – depending on the size, style, quality and features of the house.
2. Find great prices
Rather than having your contractor purchase the required materials, buy them yourself. This way you will get them cheaper than if the contractor billed you for them. Most contractors usually mark up the price before billing their clients.
3. Minimise change orders
Planning before you build can significantly reduce the number of change orders in your project. Change orders are the most common reason a construction project exceeds the budget as they were not planned for in the original budgeting. Always be watchful on any changes to the original plan as you will be responsible for the extra costs unless otherwise agreed by you and the contractor.
4.Consider size, style and shape of the house
The above factors significantly determine the amount of money your house will cost.
* Size – Consider to build a home with a depth of less than 32 feet so as to eliminate the need for specially designed trusses. It is also advisable to work with even numbers and to always have the size of your house rounded up or down to the additions of two feet. By doing this you stand a chance to reduce the amount of wasted materials.
* Style – The style of your house greatly determines the cost. For example, a two-storey house will cost less than a single-storey house of similar square footage. The former will have a smaller roof and foundation. Besides, ventilation and plumbing in a two-storey house tend to be more
compact.
* Shape – Consider minimising corners and angles in your house as they increase the amount of materials and labour required to complete the house. If possible go for a rectangular or dome shaped house as it will cost less to build.
Building a house, as you will realise, does not have to be so expensive. All you need to do is to think outside the box to ensure you are saving cash on your project without compromising on the quality.
Quality control is an integral part of the service delivery within international moving and relocation companies.
Quality control is a process employed to ensure a certain level of value in a product or service. It may include whatever actions a business deems necessary to provide for the control and verification of certain characteristics of a product or service. The basic goal of quality control is to ensure that the products, services, or processes provided meet specific requirements and are dependable, satisfactory, and fiscally (economically) sound.
Quality control can cover not just products, services, and processes, but also people. Employees are an important part of any company. If a company has employees that don’t have adequate skills or training, have trouble understanding directions, or are misinformed, quality may be severely diminished. When quality control is considered in terms of people, it concerns correctable issues. However, it should not be confused with human resource issues.
Quality Management…
On an international scale, factors which effect service delivery and the ability to measure it, are magnified. International Relocation demands rigid, thorough and effective systems of Quality Control in place. Service quality is dependent on expectations of the client, limitations on what can be achieved (customs, housing market, school availability etc) and a seamless service delivery from suppliers and contractors. Coupled with this, the corporate relocation sector demands top block service delivery for extremely high value clients. Operating in this area means that Atlantic corporate Relocation has applied this ethos throughout the company meaning service quality is consistently exceptional.
To maintain a high level of quality, Atlantic Corporate Relocation has a dedicated Quality Management Team (QMT), reporting directly to the CEO and Managing Director.
The team compliments service offering by measuring and monitoring service delivery at every stage with the assistance of a dedicated and internally developed system. The QMT monitors all factors which effect service quality from the complex relationships with suppliers, partners and agents, to individual assignee satisfaction grading.
Feedback…
The QMT actively seeks customer feedback from clients at various stages in the Relocation process, either by personal contact or through formal Quality Control feedback questionnaires. Collation of this data shows developing trends and Atlantic proactively define more effective processes across every aspect of a Relocation, focusing on each client as an individual.
High expectations…
Key performance Indicators (KPI’s) and Service Level Agreements (SLA’s) are set in place with both supplier and client alike. These actively monitor and evaluate performance over a number of metrics including but not limited to invoicing accuracy, administration and compliance with our quality assurance programmes which are specifically designed to meet individual client needs.
The benefits of rigorous quality control directly affect Atlantic’s Clients. Increased communication between departments and continually improving service processes mean that risk is reduced and a healthy relationship between, client’s and supplier is maintained.