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Tulsa Mortgage | Podcast 23 | Part 2

Tulsa Mortgage  Steve: What did your value come in on your house Tyler?
Tyler: Mine came in at about 40,000 above what I paid.
Steve: Who negotiated the contract? Wait, didn’t we work together at the time?
Tyler: Yes we did.
Steve: Did you get any help from dot com on that?
Tyler: No.
Steve: You just negotiated that whole thing yourself?
Tyler: Yes, that was me.
Steve: I don’t believe it. I don’t remember. Look, he’s lucky that at my age I don’t remember. That was like three or four years ago, so I don’t remember, but it seems to me like I must have probably helped you with that. You don’t think so?
Tyler: No. I think you made a copy or mere something.
Steve: Right, because I’m the copy guy.
Tyler: Right.
[laughter]
Tulsa Mortgage  Steve: So when we’re talking about appraisals, and you’re talking about values, you’re talking about negotiating a contract like I said it all starts with making sure that you’ve got somebody negotiating your corner. You are going to have like a crappy Realtor, but if you are diligent and making an offer and doing your research on the property and making sure that you are not overpaying for the house, then you can totally protect yourself from delays.
And I was thinking, it would be interesting I’ll see if I can get only online here Tyler with – oops, I’m on Martial’s computer, don’t tell him. I thought it would be neat to kind of go through, and if you are interested you can email me steve@stevecurrington.com, and I can send you like a sample appraisal. We’ll block out names and stuff like that way that you can see what an appraisal looks like but I think it might be interesting to0, they call it the URLA, Uniform — that’s the loan application, the URAR which is the Uniform Residential Appraisal Report, the URAR.
So I’m going to pull one up because we can go through– let me see if I can get any in here– go through and see what it kind of looks like, what an appraisal looks like and what kind of data that’s on there. I looked up the wrong one. I tried to look up my sister’s but it’s VA, so it’s not in our system here. Let’s look at the one from yesterday that we talked about where the value came in low. I won’t give any names here. Okay Tyler, fill the air with some talking or something while I’m looking.
Tulsa Mortgage  Tyler: Well I was going to say too. We are talking about offers and how offers are made in proportion to the appraisal. A lot of people don’t know, and a lot of Realtors don’t do this, but whenever you are making an offer and say you are going to offer a low ball deal, then I think you should put in reasons why you are offering what you are offering. So don’t just write numbers on a piece of paper. I give the seller an explanation. That makes them feel a little bit better about what you are doing.
Steve: Yes, well and I think that just goes to being an informed buyer, to know what you’re making an offer on. If you don’t know the market, and you haven’t done your — it’s just on the internet. I just accessed our entire appraisal system in like 13 seconds from a place that I have never accessed it before. Anyone can get any information on anything through the internet, and there’s so much data especially that pertains to homes that’s available out there that there’s no reason why you should be a misinformed buyer or why you shouldn’t know.
So look at this one, this is the one. Came in at 197,500 contract price. So they agree to pay 5,500 towards closing cost. It came in as is with no repairs which is good because that means there was nothing required by the appraisal and the guys doing general development here USDA loan.
Tyler: Yes I think that was the one.
Steve: Yes that’s right. So another thing there is on the USDA loan it’s 100% loan so they are not even putting any down payment and what the appraiser will do just, so you guys know we typically require, well typically we do, the guy that’s going to require that he have three comparables, the first comparable being the one that is most comparable to our subject property, right Tyler?
Tulsa Mortgage  Tyler: Right.
Steve: And then the other two they are supposed to bracket. So when they say bracket, that means if my contract price or if my value is at in this case 192, then we want the one that is higher than that and the one that is lower than that so we can kind of see based on square footage and all that stuff. This appraisal they were looking at they came in- this came in from Matt who is one of the appraisers we’ve used for 11 years, great appraiser, lives out right here. I’ve known him for years, does a good job. He’s not a; I would say real conservative of an appraisal, he will get values and values there. So for somebody like Matt, if the value comes in with that it is what it is. I know that he’s done his due diligence to make sure that that’s what the value is. So he’s going to give us three comps and those are comps that have sold and then he’s also going to give us one active listing, okay Tulsa Mortgage ?
So let’s start with comp number one because comparable number one should be the one that is most comparable to our subject property to the one of the odds. So remember, 197,500 was our contract price. The value came in at 192,000, a difference of $5,500.
So the first comparable is about 100 square feet less than our subject property which is normal because they give a wiggle room of measurement of 100 or 200 a percentage of the square footage because everybody measures. You think you know what your house is measured at; a human has the only measure.
So a lot of times the counting is not right, it’s based on an appraisal. So this particular property has a bigger site, that means they’ve got a bigger yard, bigger everything because their site square footage is like 11,000 whereas our customer’s property is about 8,000. So it’s about 3,500 square feet bigger, the whole property is. It’s got more total rooms. It’s got the same number of bathrooms and the same number of bedrooms, but it’s got one more room, okay? And it’s sold for 192,000.
Tulsa Mortgage  Now comparable number two, these are all, one of them is 0.04 miles away, and the appraiser will show you on the map where that is. So it’s in the same neighborhood obviously, It’s right there. The other comparable is 0.16 miles away. This is the second one, and it’s sold for 193. Now get this, our subject property is 2,081 square feet, this one is 2,300 square feet. It has four bedrooms versus three bedrooms on our subject property. It has 2.1 baths which means it probably got like a kitchen add or wet bar or something like that. And then there’s nine total rooms, so actually has three more rooms and 250 square feet more than our subject property. And guess what it sold for 193,000. And our contract price 197,500, there’s two comps that are 192 and 193 and both of them are bigger, they have more rooms.
The comp number one is better condition that’s another thing that is listed on there; it’s in better condition. It may need an adjustment of 4,000 bucks just because of the condition of the property because that first comparable–. Now Tyler for the layman that’s out there, so I can kind of explain when an appraiser’s picking a comparable, he doesn’t go into the comp, he doesn’t go in and take pictures?
Tyler: No.
Steve: Because it’s usually on the multi-list service and he can see what it’s sold for, and there’s pictures, and it’s listed based on what the condition is. That’s where he’s getting his data. He will drive by the comparable to make sure it’s still there, hasn’t been brought down that kind of thing, snap a new photo of it that type of thing. But most of his work is done before he gets there so he’s not – some people will be like, “How does he know the condition of the properties better? He’s not going into that house and inspecting it.” It’s based on the information that’s reported, and you can tell that pretty easily.
Let’s go to comp number three, same thing. Comp number three, if you look at comp number three, its 2000 square feet, 2005, so it’s roughly about the same as our subject property. But it has eight total rooms versus six. It has three bedrooms two baths. It’s also a condition one versus condition two. In that case Tulsa Mortgage  Tyler, we have– and it’s sold for 1945504 okay? In this particular case, that property is the one that he was using to bracket above because he went 192 from our first conflicts which is best and then he bracketed the other two. So when you look at this appraisal, and you know what’ll happen is we’ve reached out to the Realtors let him know how the value didn’t come in low. They’re going to say, “We need more comparables– We need more comparables.” Well, I’m going to have to tell you that it’s probably not going to come in any higher. And when you look at the county records from when the person bought this house they just purchased it March of 2015. They’ve only owned it for a year and three months and guess what they paid for?
Tyler: 192.
Steve: [laughs] Exactly, Tyler is not even looking at the appraisal, and he knows, they paid 192 for March 3rd of 2015.
Tyler: Maybe they’ll put up gold wallpapers something like actual gold leaf. They’ve spent money.
Steve: Yes.
Tulsa Mortgage  Tyler: Could have happened I guess?
Steve: It could have, but here’s the thing, what it comes out to is the — to a certain extent like I said from the beginning the value of a property is going to be determined by what someone’s willing to pay for it. But common sense also has to prevail, and it has to support it. And in this case it doesn’t so when you’re buying a house we start with, get a good Realtor make sure you got somebody that’s going to negotiate on your behalf and don’t count on the appraisal to correct value if you over paid it or if you’re overpaying for it. But if it does, considered it a gift, because you just prevented yourself from — can you imagine Tyler this customer in a year and a half or two years trying to sell this house? They did 100% loan; they put no money down, and they would’ve overpaid by 5,500 bucks. What do you think happens in 24 months? They’re stuck.
Tyler: Yes, they could lose some money.
Steve: They’re bringing money to the closing to sell their house because they bought wrong. Whatever he says you got buy right and if you’re going to buy right, you need a Realtor to negotiate on the front end, you need to get appraiser to make sure which you can’t pick but call good lender like, an awesome mortgage lender like stevecurrington.com and make sure that the value is what you’re paying for it. Otherwise, you’re going to have a lot of pain. And, anything you want to add to that Tyler?
Tyler: Think you nailed it.
Steve: I nailed it, that’s right. Well, that’s Steve Currington and Tyler Whyburn for the Steve ‘N Tyler show episode number 23, I think we were–
[laughter]
Tyler: I think so.
Tulsa Mortgage  Steve: We’re on to something. Hey, guys thanks for listening and we will be back soon.
[00:24:39] [END OF AUDIO]