Remember the horror stories you saw on the local and national news about all the new construction problems? One is leaks which leads to the dreaded word mold, a whole problem in itself. The stories go on and on. Recently a buider filled a dump and built houses on it. Needless to say, when things settle underground, they do above it. The houses were collapsing and the EPA (Environmental Protection Agency) found barrels of some kind of petroleum substance.

he most important thing is that you carefully select your home inspector and be there at the time he/she makes the examinination. You may not know what is supposed to happen but they should go over the property with a fine tooth comb. Every wall, shingle, window, receptacle…..is looked at and tested. The good ones go in the crawl space, attic and on the roof. When you get the report don’t be alarmed. Some things are to be expected, such as outdated electrical systems in older houses and minor settlement.

An assessment is done by a city or county inspector to determine tax bases. Many times they are licensed or certified appraisers but they don’t have to be and often are not. They don’t do an appraisal. They go by public records, quite often wrong data. Some do have pictures and some have sketches. I put a woodstove in my house a few years ago. I went down and paid for a permit and to this day it is not on record. This is also true with additions which of course add square footage as well as value. I read the other night that approximately thirty percent of property is over assessed, therefore overly taxed.

If you have good reason to think your property is in that category, you should contact your assessor and ask for an appeal. But, understand appreciation has seen an all time high in recent years and may very well be the reason for your estimated value.

See my other article on understanding an appraisal for more detail. An appraiser does a very detailed extensive research on the area, neighborhood and specific property. Upon arrival pictures are taken. Notes are taken about curbs, gutters, sidewalks, street, landscaping…Then the house, deck, garage, porch and so on are measured, the square footage is calculated. Then every single item is noted inside the property. The appraiser goes to at least three similar properties (comparables) that were recently sold, ideally in the same neighborhood. Pictures and notes are taken. After returning to the office a sketch is drawn, pictures are produced and the work begins assembling all data and comparisons before arriving at an estimate of value.

Suzie is a licensed broker and certified residential appraiser with twenty years of experience in the industry. She majored in real estate and architecture and prefers to do sketches by hand rather than using cad programs. Other professionals in the field have contributed as well including agents, brokers, appraisers and educators. http://www.freewebs.com/realestatenews

A Difference Between Appraisal, Assessment, Home Inspection

In the best case scenarios the appraisal is returned indicating that the fair market value of the home meets or exceeds the sales price. The problem comes in when the appraisal indicates that the fair market value of the home is less than the sales price. In the latter case, the prospective buyer would either need to drop the deal or renegotiate the sales price with the seller.

As you can see, it is critically important that you find a reputable and competent real estate appraiser. That one appraisal can easily make or break a deal. Even if you are not financing the purchase through a lending institution it is still worth the effort to insure that the property you are investing in is really worth the amount of the purchase. If you should hire a less than competent real estate appraiser you find out the hard way later on that the property you purchased was not really worth the amount that you paid.

Real estate appraisers perform an evaluation of a property and then provide a written evaluation after consulting standardized checklists and comparing the property in question to county land value sources and sales information on nearby similar properties. The estimation of replacement costs is also taken into consideration. Finally, real estate appraisers must be able to verify legal land descriptions. As you can see, there is quite a bit of work involved in performing a competent real estate appraisal and it is important that each step be performed accurately.

You real estate agent will most likely be able to suggest a real estate appraiser but this does not necessarily mean this is the right person for the job; it merely means this is the person they most often work with. To get the job done right you need to find a real estate appraiser who is able to perform a completely objective evaluation.

Look for someone who has been formally trained and who possess a license with the state real estate commission to perform such appraisals. Also look for someone who possesses adequate experience in performing real estate appraisals and who is knowledgeable about the local real estate market. Some states require real estate appraisers to have experience as a real estate agent and to hold a current real estate license; even if your state is not one of these it may be a good idea to look for someone with these qualities anyway because they probably have their finger on the pulse of the local real estate market.

Like real estate agents, appraisers commonly specialize in certain types of real estate. Some specialize in commercial properties while others work only in residential properties. Some appraisers even specialize in only high end or luxury properties. Many consumers find it beneficial to select a real estate appraiser who specializes in the specific type of property they wish to have appraised. Finally, don’t forget to ask for references and/or recommendations from any real estate appraiser you consider.

Nicole Soltau is the President and Founder of CreditUnionRate.com.

The Leading Credit Union Directory.Search, Find, Join.http://CreditUnionRate.com

Choosing a Reputable Real Estate Appraiser

I’m still amazed at people who will spend countless hours, days and months looking for just the right home and then choose a home inspector solely because he was $50 or $100 than the next guy.

Home Inspector Schools are turning out record number of new inspectors. These people come from all walks of life. One week they are the door greeter at a department store, the next they’re a “Certified” home inspector.

Before choosing any inspector there are some things you need to know.

Tip #1: Research, research and research some more. Find out as much as you can about the inspector you want to hire. Call them up and speak with them over the phone. Are they easy to talk to? Are they knowledgeable about homes? Will he/she email you a sample report? Is the report easy to read and understand?

You may also want to ask your friends and coworkers for referrals. However, never take their recommendations blindly. The majority of people have no idea if they received a good inspection or not. They just know they like the inspector and he pointed some things out. Research, research, research!

Tip #2: Never hire an Inspector solely on the recommendation of your Real Estate Agent. While you may think that your agent hung the moon, they could be pushing you to use a “wink and nod” inspector, or as we in the business call them, “Drive by Inspectors.” They grab your check as the drive by the home their suppose to be inspecting. These types of inspectors “don’t rock the boat” or are not “deal killers”.

These inspectors get their business from agents who control them. The agent knows the inspector will see to it that the inspection doesn’t derail the transaction. Even if your agent recommends 2,3 or more inspectors, it’s wiser to avoid the conflict of interest and find an inspector who works for you and you only.

Tip #3: Why the word “Certified” may not be a good thing. Listen up. You can become a “Certified” home inspector by sending a hundred dollars or so to one of many home inspection associations. No experience required. Just send them the money and they send you a “Certified” certificate.

Sure, it’s good that your inspector should belong to some state and national home inspector associations. Most professionals in any business belong to industry associations in their field. Home inspectors are no different. However, there are many companies out there looking to make a buck off the backs of new home inspectors. Don’t fall for the “Certified” or “Master Certified” home inspector label. Some of these organizations use the word “Certified” in their name to try and sound credible. Buyer beware.

If you’re looking for an inspector on new construction, you do want to look for a Code “Certified” inspector.

Two national home inspector associations that you can trust are the American Society of Home Inspectors (ASHI)- http://www.ashi.org and the National Association of Home Inspectors (NAHI)- http://www.nahi.org.

ASHI has very strict requirements for membership including passing the National Home Inspector Examination. NAHI has similar requirements.

Tip #4: You get what you pay for. Price should be at the bottom of your list of priorities when shopping for an inspector. A good, thorough and knowledgeable inspector will save you money while a poor inspector will cost you many times their fee. You may need that $100 bucks you saved to try and repair that $10,000 roof your inspector failed to warn you about.

Let’s take a 2000 square foot home. A top of the line inspector who knows what he’s doing will cost you approximately $350 to $600 for this size home, depending on a few variables. You have to ask yourself, if the inspector I choose charges less, why? What will be missed or left out of the inspection?

On the other hand, a good inspector will find things others will miss. You may want to go back to the Seller and renegotiate the price of the home. I’ve seen Sellers drop their price $30,000 because of the items we found wrong with homes. I’ve also saved my Clients countless thousands of dollars by brining major defects to their attention before they signed on the dotted line.

Tip #5: Check with you state to see if they require home inspectors to be licensed. More and more states are requiring home inspectors to be licensed. Even in these states, there are some inspectors who can’t meet the standards and will be performing illegal inspections. Check them out before hiring them.

Choosing the right Home Inspector is a very important process when buying a home. Don’t leave it to chance. Do your homework and you’ll be money ahead.

This article may be freely distributed as long as this sig/resource box is left intact with the article.

Donald Lawson is a Professional Real Estate Inspector licensed in Oklahoma (#454) and Texas (#5824). He currently owns and operates V.I.P. Home Inspections, a multi inspector firm in Houston Texas. You can find more out about him and the home buying process by visiting his website at http://www.best2inspect.com

Home Inspectors: 5 Tips to Choosing the Right One

In figuring replacement cost the question is: What would it cost to buy this land and put this house on it? If the land (improved) would cost $40,000, and the house could be built for $150,000, the value indicated would be around $190,000 – if the house is fairly new. If it has used up 10% of its useful life, you can deduct $15,000 for depreciation.

Replacement cost is not really a very useful measurement. It is difficult to say what the land is worth in a city center where none is left for sale, for example, and tough to gauge depreciation. It is used as a secondary method, and for unique homes that can’t be compared easily with others. The primary method of real estate appraisal used for homes is a market analysis using comparable sales.

Real Estate Appraisal 101

To get a good idea of what a home should sell for, you need to compare it to homes that have sold. Find at least three similar homes in the same area that have sold within the last year, preferably within the last six months. This information is available in the county records, or from a real estate agent with access to the MLS (multiple listing service).

Now the confusing part. You start with the selling price of each of your comparables. If your subject home has a second bathroom, and the a comparable doesn’t, you add the value of the bathroom to the sales price of the comparable. If a comparable home has a blacktop driveway, and the subject home doesn’t, you take the value away.

You are rectifying differences, to see what comparable homes would have sold for if they were like yours. So if a comparable sold for $140,000, and a bathroom is worth $15,000 in your area (ask a real estate agent for help with these figures), you ADD $15,000 for the bathroom it doesn’t have. Then you subtract, say $4,000, for the paved driveway it does have. This gives you a comparable sales price of $151,000.

You do this with all differences between the subject home and each comparable. When done, you average the three comparable prices. So if the three comparables have adjusted sales prices of $151,000, 162,000, and 149,000, you add the three figures and divide by three. The indicated value of the home is $154,000.

Of course all appraisal is an inexact science. If you can only find comparables sold over a year ago, you have to estimate appreciation in the area. If one sold with seller financing, you have to decide how this affected the price. For all of it’s flaws, however, for single family homes, this is the most accurate method of real estate appraisal.

Steve Gillman has invested real estate for years. To learn more, and to see a photo of a beautiful house he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com

Real Estate Appraisal – Do It Yourself

Structural Problems – Small Rural Home

With a small rural home purchase, the discovery of structural problems can be more problematic. Typically, neither the seller nor buyer has sufficient funds to undertake major repairs. Still, solutions such as the following one can be found.

The house was a 3 bedroom, one bath, rambler built on a crawl space set on a one-acre lot in a rural setting. The sellers were a husband and wife both of who were disabled. I’m not talking about a "slipped on a banana peel" trumped up disability here. The husband had been electrocuted at work, spent 14 days unconscious and suffered a massive heart attack. The wife suffered from a progressive problem with arthritis. The buyer was a young widow with 3 children.

The home inspection turned up old termite and water damage. The termites had been killed and the drainage problem fixed, but the sill plates and floor joists were seriously damaged. The floors were somewhat soft and sagged in various areas. The young widow could not afford and did not want to deal with the problem. She asked to be released from the contract.

To complicate matters, the husband’s former employer had declared bankruptcy and had not paid his medical bills. The husband was borrowing money to pay the bills, but the medical bills were still growing. The sellers discussed the situation. They understood the buyer’s point of view, but did not know how to fix the problem. Their mortgage lender declined to make a second loan and the sellers didn’t have any savings left.

A business friend suggested the sellers ask a young builder friend to evaluate the structural damage. The goal was to get a ballpark idea of the cost to repair before throwing in the towel. It turned out that the builder couldn’t remedy the problem because the house needed to be raised to give room for new sill plates and floor joists. The builder suggested a house-moving firm make suggestions.

The business friend also gave the sellers the name of a lender who had been useful to people in uncomfortable circumstances. The sellers contacted the lender and were able to get the necessary loan. The house moving firm and builder worked out a reasonable deal and the loan was used to get the necessary work done. The deal closed, the sellers paid off the loan, paid down bills and the buyer was happy.

The moral of the story? No matter what happens, don’t get angry, don’t lose your cool and don’t give up. If you can keep your head, behave like a reasonable adult, and keep communication lines open, your chances of holding your deal together are amazingly good.

Raynor James is with http://www.fsboamerica.org – providing homes for sale by owner, “FSBO”, properties. Are you thinking, “Should I sell my home?” Visit http://www.fsboamerica.org/seller.cfm to sell your home sale for free for one month.

Finding Structural Problems During Escrow ? Small Rural Home Example