Seattle Residential, Commercial and Agricultural Real Estate Appraisal Blog

Patrick M. Lamb January 15th, 2010

Divorce Appraisals

Finalizing a divorce involves many decisions, including “Who gets the house”? There are generally two options regarding the house – it can be sold and the proceeds divided, or one party can “buy out” the other. In either case, one or both parties should order an appraisal of the residence. Divorce appraisals require a well supported, professional appraisal that is defensible in court. When you order an appraisal from us, you are assured that you will get the best in professional service, courtesy, and the highest quality appraisal. We also know how to handle the sensitive needs of a divorce situation.

Attorneys and Accountants rely on our values when calculating real property values for estates, divorces, or other disputes requiring a value being placed on real property. We understand their needs and are used to dealing with all parties involved. We provide appraisal reports that meet the requirements of the courts and various agencies.

As an attorney handling a divorce, your needs oftentimes include an appraisal to establish fair market value for the residential real estate involved. Often the divorce date differs from the date you order the appraisal. We are familiar with the procedures and requirements necessary to perform a retroactive appraisal with an effective date and Fair Market Value estimate matching the date of divorce. The ethics provision within the Uniform Standards of Professional Appraisal Practice (USPAP) binds us with confidentiality, ensuring the fullest degree of discretion.

Estate Appraisals

Settling an estate is an important and sometimes stressful job. As an executor you have been entrusted to carry out the wishes of the deceased as swiftly and exactly as possible. You can count on us to act quickly and with sensitivity to the feelings of everyone involved. Attorneys and Accountants rely on our values when calculating real property values for estates, divorces, or other disputes requiring a value being placed on real property. We understand their needs and are used to dealing with all parties involved. We provide appraisal reports that meet the requirements of the courts and various agencies.

Settling an estate usually requires an appraisal to establish Fair Market Value for the residential property involved. Often, the date of death differs from the date the appraisal is requested. We are familiar with the procedures and requirements necessary to perform a retroactive appraisal with an effective date and Fair Market Value estimate matching the date of death. The ethics provision within the Uniform Standards of Professional Appraisal Practice (USPAP) binds us with confidentiality, ensuring the fullest degree of discretion.

All too often, people do not fully appreciate the need to have a detailed real estate appraisal prepared in support of the numbers being used in documents filed with revenue authorities. Opinions of value used in documents filed with the revenue authorities should be supported by a detailed report as to how the appraiser arrived at his conclusions. Such a report will certainly demonstrate to the authorities that the numbers used are well founded and substantiated.

Having a professional appraisal gives the executor solid facts and figures to work with in meeting IRS and state agency requirements. It assures peace of mind to everyone concerned because we are there to stand behind the appraisal if it is challenged.

Date of death valuations

Estate tax liability. Disposition of assets under a will or in probate. There are many situations — none of them lacking stress and complexity — where you might need an appraisal of property that states an opinion of what the property was worth on a date some time ago, rather than when the appraisal is ordered. For estate tax purposes or disposition of the assets of a decedent, a “date of death” valuation is often required. (Sometimes, the executor of the estate may choose to have the date be six months after the date of death — but the same principles apply.)

Attorneys, accountants, executors and others rely on Lamb Hanson Lamb Appraisal Associate, Inc for “date of death” valuations because such appraisals require special expertise and training. They require a firm that’s been in the area for some time and can effectively research comparable contemporaneous sales.

Real property isn’t like publicly traded stock or other items which don’t fluctuate in value very much or for which historical public data is available. You need a professional real estate appraiser, bound by the Uniform Standards of Professional Appraisal Practice (USPAP) for a high degree of confidentiality and professionalism, and you need the kind of quality report and work product taxing authorities and courts need and expect. Please browse our website to learn more about our qualifications, expertise and services offered.

Assessment appeal services

Most localities determine your property tax burden based on an ad valorem assessment of the property’s value. Sometimes, as a property owner, you get an unwanted surprise in the mail telling you your taxes are going up, and sometimes it may seem as though your assessment is too high. Often, matters like this can be resolved with a phone call. However, if after discussing your assessment with your local taxing authority you still feel as though your property was overvalued, a professional, independent, third-party appraiser is often your best bet in proving your case. That’s where we come in. There are as many different procedures for appealing assessments as there are property taxing districts, so it’s important to enlist the help of a professional appraisal firm that’s experienced and trained in the ins and outs of your particular jurisdiction.

Please note: It makes sense to do your own research before determining whether to go forward with a property assessment appeal, especially before you make the decision to hire a professional appraiser. However, according to the Uniform Standards of Professional Appraisal Practice (USPAP), we are not allowed to take “shortcuts” — i.e., your research — and use it on its face as part of our independent evaluation. When you hire us for an assessment appeal, you’re commissioning an independent, third-party professional appraisal report. As such we do our own evaluation, beginning to end. If you’re right that your property has been overvalued, an independent report such as ours will be even more persuasive than any other evidence you can marshal on your own. But it depends on our ability to do the work independently.

Sometimes, you will have a hearing on your assessment appeal and will need for the appraiser you’ve hired to testify on your behalf. Be assured that at Lamb Hanson Lamb Appraisal Associate, Inc, we are able to professionally and persuasively testify at appeal hearings. Browse our website to learn more about our qualifications, expertise and services offered.
Condemnation appraisal

It’s not just a good idea — and it’s not just the law — it’s your constitutional right that if the government wants to condemn your property, or take it from you by means of “eminent domain,” it must give you “just” compensation. That’s where we come in.

The government is likely to have its own idea of “just” compensation, maybe based on a professional appraisal. But an appraisal on your behalf, performed under the standards of the Uniform Standards of Professional Appraisal Practice (USPAP), is powerful — and useful — evidence of what you’re entitled to, and protects your rights.

It works the other way, too. We perform work for government clients needing to offer and provide “just” compensation in eminent domain cases. A USPAP-compliant appraisal is the best way to determine fair market value of any property.

If the above makes condemnation appraisals sound simple, that’s not the case. There are many legal and procedural issues involved in an accurate condemnation appraisal. A federal condemnation will require a different analysis and report format than a state or local taking. And in any event, the jurisdiction proposing to condemn the property is likely to have its own rules for appraisal that must be followed. It is important to hire an appraisal firm that has experience and training in these types of valuations.

An eminent domain action may reserve certain rights in the property to the current owner. The government may petition to take only part of, or a partial interest in, the property. This requires the appraiser to value the “larger parcel” — the currently undivided, contiguous property — and the “remainder” of the property, or rights to use the property, that will be held by the owner after condemnation and factor that into the overall value of the taken property. For an added wrinkle, it will often be necessary for the appraiser to determine his or her opinion of value on the “remainder” before the taking and after the development or use prompting the taking, because they are likely to be very different.

Likewise, appraisers always consider a property’s “highest and best use” when formulating an opinion of value. For many condemnation appraisals, it is necessary to consider the highest and best use of the property before taking and after the development or use resulting from the taking. Again, it is important to have a professional appraiser with experience and training.

Because an appraiser may often have to testify about his or her condemnation appraisal, it is important that certain steps in valuation methodology — such as selecting and analyzing comparable sales — be performed more thoroughly. You rely on your appraiser to know what’s necessary, so again, it’s important to select an appraiser/company that has experience and training.

Here at Lamb Hanson Lamb Appraisal Associate, Inc, we are ready and able to perform your condemnation/eminent domain appraisal. Browse our website to learn more about our qualifications, expertise and services offered.

Expert Witness Testimony
We offer a full range of Real Estate Appraisal services, with experience in many types of property. We are also experienced in litigation support and expert witness services. Clients who have used our expert testimony services include government agencies, tax entities, financial institutions, legal and accounting firms and many other businesses. In many cases, our independent, supportable analysis has allowed clients to settle cases without going to court.

An appraiser must remain unbiased in performing an appraisal of a property. But we can consult with you and advise you about the relative strength of an appraisal presented by opposing parties. We can also perform additional research and analysis to support or discredit assumptions or conclusions.

Some examples of issues we have experience with include:

• Valuation of “stigmatized” property
• Valuation as of a date in the past
• Valuation for condemnation and eminent domain cases
• Effect on value of properties with history of flood
• Estate settlement
• Valuation for divorce, partnership, taxation issues etc.

With our experience and proven track record we are ready to take on any type of appraisal assignment and our appraisal values stand up under the most severe scrutiny.

• Uncategorized
• Comments(0)

Sibyl Lamb December 9th, 2009

Residential Market – Overall, the residential market is still struggling, although there were several positive numbers in sales prices. However, home prices are still declining, but the percentage of decline is getting smaller. Foreclosures are still rising. With over 40,000 properties available for sale in Western Washington, during 3rd Quarter 2009, only about 12.8 percent of these properties were sold. The greatest number of sales occurred in the $250,000 to $350,000 range.

Apartment Market – Only 25 sales have occurred during the first three quarters of 2009 for apartments larger than 20 units. In fact, there were no sales occurring in the third quarter. Rental increases have slowed, but capitalization rates are rising and gross rent multipliers are going down. All of the sales that occurred are for apartments more than 15 years old. However, Snohomish County 2-4 showed a positive increase in price per unit. Both King and Pierce Counties had increases during third quarter, while Snohomish had no sales.

Retail Market – The retail market is showing signs of stress. Almost every subsection of the retail market in every area has negative absorption. Capitalization rates are increasing. Lease rates are continuing to decline.

Industrial Market – The flex market has remained a problem throughout the last few years with high vacancy rates and low lease rates. Vacancy rates have increased in all areas and lease rates have fallen. Of concern is the very large negative absorption rate for the Southend and Tacoma.

Office Market – This market is showing marked increases in vacancy rates due to the amount of new inventory coming into the market, particularly in the downtown Seattle area. Much of the space is not preleased. Consequently, lease rates are decreasing in most areas for all office classes. Capitalization rates are also increasing.

Recommendations – It is advised that any property type be approached with caution. Apartment market is guarded. As foreclosures increase, we would expect that people will need to turn to rentals. Thus, demand should increase. The retail market is showing signs of strain, with declines in lease rates. Office and industrial is not a good time to invest in unless it’s for owner user purposes. Then deals can be found for purchasers to avoid paying monthly rent.

• Uncategorized
• Comments(0)

Patrick M. Lamb November 20th, 2009

By Patrick M. Lamb, November 18, 2009

Tax Appeal Professionals: “Success is Appealing”

It feels pretty good coming off a large tax appeal victory with the King County Hearing Examiner that reduced our clients’ assessment by over $3,000,000 on large industrial manufacturing plant in the Georgetown neighborhood of Seattle. We figure our client had approximately $35,000 to $40,000 cut off his annual tax burden that year. He was very pleased with the outcome, as you can imagine.

Assessment appeals have become ever more prevalent since the fallout of the real estate market over the past two years. We have seen trends in the past, where the assessor valuations were considerably below market value, (some appraisers have claimed that 15% to 20% below market was the norm). The reason for this, however, was not due to some behind the scene political collusion.

Remember, the assessors’ task is to derive a market value for all real property in the county in order to distribute the tax obligation in a fair and consistent manner. They are not tasked with the responsibility of deriving tax levy rates- that is left up to the various taxing jurisdictions and their respective politicians.

As such, the reason for your tax assessment being generally low over the past eight years or so is largely attributable to the rapidly increasing market conditions. The assessors simply could not keep up with the rate of appreciation that was occurring. Alternatively, the recent rapid decline in the market did not warrant the assessor office enough time to reconcile their values in the other direction, and many properties are easily being over assessed by a comparable amount.

Commercial and residential property owners across the board, consequently, are potentially faced with increasing tax burdens- poor timing in light of the looming economic downturn. This is coming as quite a shock to many of our clients who are just now coming to grips with the hard reality that anticipated gains in home equity and/or the durability of commercial income streams have dissipated.

Like property owners, assessors too are caught it the wash of this turbulent market that has just gone from bubble to burst. They rely on a combination of historic sales evidence and anticipated future income benefits to determine a property’s value. During a typical long term trend of inclining or declining market conditions, it is relatively easy to find supporting data to derive credible valuations. However, when the direction of a market changes drastically, an information lag often exists that limits ones ability to perform a valid analysis.

This has contributed to one of the biggest valuation crises in decades, and will likely continue to occur until the market stabilizes in late 2010 and into 2011. Subsequently, your local assessors will potentially be missing their mark for some time to come.

The good news is that this uncertainty of information provides a great opportunity for debate. A seasoned real estate appraiser or consultant can be very effective in guiding an examiner to figure out the true market value of your property.

Sharing this experience

The typical experience begins when a potential client calls us to talk about the appeal process. In most cases, there has been a drastic change in their assessment and they want to talk to a professional about how best to proceed.

On an aside, we often hear of cases where the assessor has reduced the “improvement” value to essentially nothing, while sky-rocketing the “land” value. This can be a confusing and startling event for many property owners. Especially, when there is plenty of economic life remaining in their property. Yet, please be aware that this is a common practice in dense urban settings. It is the result of a highest and best use analysis performed by the assessor whereas they find the value of the underlying land as a redevelopment site outweighs the value contribution of the improvements.

When such circumstances are true, it is common practice of appraisers to value the property by taking the land value, plus the net present value of any income stream, less the future demolition costs. This is a typical thought process employed by the most probable purchaser- a developer or speculator. The assessor, to some extent, follows a similar methodology. If this happens to you, my advice is to ignore the value of the property, as improved, and focus all of you attention on arguing the land value. You may result in better outcomes by simplifying your attack on the comparable sales, versus trying to convince the assessor that their methodology is wrong.

On first conversation, we typically engage with the client to perform a preliminary data collection for the subject property, which includes a comparable property search. Following, we advise the client on whether we feel they have any significant claim for appeal. If substantial evidence is available, we would advise the client to engage me to perform an appraisal that will be used as evidence in the hearing. Simultaneously, the client would submit the appeal petition to begin the legal process with the Board of Equalization. Upon confirmation of a hearing date, the client can either present the appraisal findings him or herself, or hire us to present the findings.

One important aspect of the presentation, especially when working with commercial property, is that the details of each comparable can be very complex. For instance, the petitioner would benefit from understanding the nuances of ingress/egress, corner influences, traffic signals, access to transportation linkages, and overall property productivity analysis that includes dozens of other site and structural characteristics. Many of these items are often misunderstood by property owners, and the assessors themselves. Alternatively, presenting a clear understanding of these items and how they impact value can be very persuasive in front of an examiner.

The process for appeal

For a detailed discussion of how the appeal process works, please read the blog on our website titled How’s My Tax Assessed Value High in THIS Market?. The links may be expired, yet the overall discussion is still relevant today.

General outline of the process

1. Preliminary consultation to examine subject and market comparables
2. Submit appeal petition to the BOE
3. Prepare appraisal
4. Establish hearing date
5. Prepare for the hearing
6. Hearing
a. Location is typically in the county administrative building
b. Actual hearing protocol
i. Present opinion of value to examiner
1. Focus on sales comps and income characteristics
ii Assessors’ presentation of value
1.Not an appraisal, mostly statistical analysis and charts.
iii Rebuttal and closing

• Uncategorized
• Comments(0)

jfernandez January 4th, 2009

In 2003, I happened to take a continuing education class on a whim at Discover U, a lifelong learning school in Seattle. At that time in my 30s, life was feeling repetitively boring with the same old, daily work grind, week in and week out like a robot. Mostly everything after graduating from college had been about work, career, and making money as well as a living. Personally, I had always enjoyed school and learning new things, but over time in the workplace, I had lost my learning spirit. Weeknights and weekends were about vegetating, recovering from work, and escaping from work.

Taking that initial class at Discover U helped me rediscover a joy for learning. It awoke in me a long, lost hunger to learn new things. It was refreshing being back in the classroom after 10+ years, interacting with other students and meeting new people. I think it is a common experience for many adults in our culture where life after graduating from school becomes all about work, and any desire to learn new things disappears. At Discover U, I enrolled in another class, took another class, and another. I instantly became hooked on taking all kinds of classes from cooking to travel to exercise to career development classes. Rather quickly, I became a volunteer instructor at Discover U teaching my favorite hobby, volleyball, to beginners. I have taught now for the last 4 years, and it has been addictively fun and a wonderful blessing to see students learn how to play volleyball and play it well! Another class I took was an introduction to real estate appraisals, which was an entry point into a new career and preparation to obtain a license with the state of Washington. I definitely plan to take classes and teach classes throughout my life.

Why continuing education? One, for personal growth and enrichment. Learning of any capacity has many health benefits in life such as brain stimulation, stress reduction, alleviated boredom from routine and repetitiveness of everyday life, to counteract business, and to combat aging. Henry Ford, the famous American industrialist (1863-1947), said it best that, “Anyone who keeps learning stays young. A great thing in life is to keep your mind young!” I read an anonymous saying once that if you stop learning, you will stop growing, and if you stop growing, your mind will deteriorate quickly.

Secondly, for career growth and development. I began the process to obtain certification in my appraisal career. I have become an associate member at the Appraisal Institute, the leading membership association for real estate appraisers. AI offers classes nationwide and online for state license, certification, AI designation, and continuing education. These classes are taught by designated members who have years of experience in the appraisal profession. When I took my first AI class, I found it to be very thorough, informative, challenging, and well taught over 4 days in the classroom.

Sadly, Discover U went bankrupt and closed its doors in Belltown. Like the phoenix rising out of ashes, a new school was born offering free classes, on anything and everything, to the greater Seattle community. Seattle Free School is a school where everything is free. It’s free to take and teach classes. No money is exchanged nor are donations accepted. The school was founded by Jessica Dally. Jessica teaches classes herself, which reflects her diverse range of interests: from cheesemaking to soapmaking, to car maintenance and even beekeeping! In only six months, the school had over a thousand people signed up on its mailing list, and growing more by the minute. I taught a beginners’ volleyball class last summer. In the near future, I am teaching a class on investing in stocks for beginners. For classroom space, the school uses community centers and public libraries. Seattle Free School encourages anyone to teach even if one lacks any teaching experience. All that is needed is a volunteer heart to share knowledge and experiences with others! Elie Wiesel, the famous Noble Peace prize winner, said that, “What I receive I must pass on to others. The knowledge that I have acquired must not remain imprisoned in my brain. I owe it to many men and women to do something with it. I feel the need to pay back what was given to me. Call it gratitude.”

Here at Lamb Hanson Lamb Appraisal Associates, this giving spirit is embraced within the company where AI designated and senior appraisers are encouraged to take trainees under their wings to help them grow and advance in their appraisal careers.

• Uncategorized
• Comments(0)

Michael B. Lamb, MAI, SRA December 28th, 2008

The “Historic Properties” Preservation and the Valuation Process by Judith Reynolds, MAI and published by the American Institute is an absolute masterpiece of American history that follows the preservation movement up to today.

The Historic Preservation Program started in the US with the passage of the National Historic Preservation act of 1966. To date, there are over 79,000 listed properties covered under the Act. The purpose of this Act was to create a means for the documentation, designation, and financial assistance necessary to save landmark properties from total extinction or destruction.

As time went on, the Federal government empowered local municipalities and authorities to create ordinances with standards and guidelines for incentives and the control of historic places and properties.

Thanks to the Advisory Council on Historic Preservation federal support was gained that resulted in the above named Tax Reform Act of 1966. This Act created economic incentives and disincentives, benefits, and penalties that included the beginning of investment tax credits.

Further incentive efforts resulted in the Economic Recovery act of 1981 which accelerated property depreciation and attracted large scale developers.

However, 1982 saw the tax credits base change from a 3 tier savings to only 2 tiers. One, the 25% investment tax credit for historic rehabilitation was reduced to 20% while the 15% and 20% credits for 30 and 40 year old non-historic buildings were combined into a single 10% credit for buildings built before 1936. The one year passive loss rule set at $7,000 to be used up annually now could only be applied against the tax on income generated by the projects themselves. (High-income taxpayers could not use the tax credit at all).

The overall savings and write offs on investment tax credits were forever changing and more and more individual funding again was being relied on.

The 1978 Urban Development Action Grant (UDAGS) allowed grants up to 50% of rehab costs. This changed and ITC’s now were only being applied at the local and state levels and allowed for economically feasible projects only.

The 1995 Historic Home Ownership Assistance act capped the housing tax credits from 20% of costs to $50,000 maximum. These credits however, could be transferred and could reduce interest on mortgages.

Other issues began to rise such as actual uses vs. economic uses, Eminent Domain, and Condemnation Authority conflicts, exemptions and/or tax freeze actions. Also, many properties became subject to the ability to achieve competitive market sales, a reasonable return on investment and a proportion of rent allocation to business income in order to meet eligibility requirements. More and more local, state, and federal authorities are requiring appraisals as the means for establishing eligibility, benefits and analysis of Investment Tax Credits and values for these Historic Properties.

One or all of the common approaches to value are typically used to identify value benefits to individual corporations or agencies who participate in these projects. The appeal, besides third party oversight, is that the appraisal or valuation process is an orderly program by which the problem is defined; the work necessary to solve the problem is planned, and the data involved is acquired, classified, analyzed, interpreted, and translated into an estimate of value.

Some of the available benefits and incentives are as follows:

1. Subsidized interest loans
2. Tax exempt bond financing
3. Mortgage guarantees
4. Relief from local sales tax, tax moratoriums, freezes and abatements
5. Assessment tax relief
6. Zoning and building code relief
7. Public purchase and private resale at low prices
8. Public/private joint ventures
9. Sale of Development Rights (Transferable Tax Credits)
10. Accelerated depreciation
11. Charitable Donations and Grants

Appraisers must thoroughly document what they are appraising and sometimes must be creative in their approaches. Incentives are created to benefit participants and can create added value. A $50,000 rehab grant in the Cost Approach may create additional return in the Income Approach. Restricting the building height of a historic property may mean analyzing land value by dividing the floor area by the existing building and comparing it to the potential floor area to find the difference in lost density dollars per square foot of land area. Relief from real estate taxes may well mean lower expenses and a higher NOI (net operating income) and a higher market value. Many times historic properties are tourist attractions and create substantial income advantages; all must be measured properly.

Of the 37 listed historic places in Seattle including properties in the Ballard District, Georgetown, Columbia City, Harvard-Belmont Capital Hill, Pike Place Market, the Stimson-Green house, the Arctic, Lyon and Hoge Buildings, Pioneer Square, The International District, and so on, listing them all, Lamb Hanson Lamb has appraised 14 properties.

Those who would like additional information on Historic Properties in Seattle may view the Preservation Advocate website at www.historicseattle.org, or call Christine Palmer at 206-622-5444 ext.226.

• Uncategorized
• Comments(0)

Joseph A. Hasson July 31st, 2008

A residential real estate appraiser produces a variety of appraisal reports that are specific to the property type, the value definition applied, and the client’s needs. For residential financing purposes, conventional or FHA, the appraisal of typically written on a standard 1004 Form report, also known as a Uniform Residential Appraisal Report (URAR).

Fundamentally, there is no difference between an appraisal report written for a conventional loan and one that is written for an FHA insured loan. Both display an “opinion of value” that represents Market Value. Starting in 2006, the FHA appraisal became the same URAR appraisal report used for conventional loans with the exception of a statement regarding the Intended User that reads, “to support the underwriting requirements for an FHA insured mortgage”.

So why do we perceive a difference between an FHA and a conventional appraisal report?

To know that, you need some knowledge of FHA history. Prior to 2006, an FHA report required two HUD forms to be included in all appraisal reports.

The first was HUD Form 92564-VC, which was a “Notice to the Lender” form also referred to as the “Valuation Conditions” or “VC” form. This form, with 14 sections, broke down the property into sub-categories including: site, soil, topography, site improvements (well and sewage), pests, access, structure, foundation, roofing, mechanical systems, health and safety, lead-based paint and specific requirements for condominiums and manufactured homes. In this form, the appraiser would check off the presence or absence of the various elements within each section. It was a tedious, but thorough analysis of a property that required the appraiser to scrutinize the property and report the findings on the VC Form.

The second was HUD Form 92564-HS, which was a “Notice to the Homebuyer” form. This form summarized the findings on the VC form into a palpable format. If there was a problem identified on the VC form, it was noted and explained on the “Notice to Homebuyer” form. Fortunately or unfortunately, depending on which appraiser you ask, these HUD forms were retired.

Also changed was the FHA requirement of reporting separate “As-Is” and “As-Repaired” values for properties that had observable defects, whether they were major defects, e.g. cracked or sinking foundation, roof leads, health and safety issues; or minor defects, e.g. missing handrails, cracked windows, worn out flooring. This “As-Is” and “As-Repaired” requirement created problems for everyone. It necessitated the appraiser to act as a contractor and determine a repair cost that was, for the most part, unsubstantiated. This requirement also caused significant delays in the delivery of the reports as well as an administrative nightmare.

Still confused as to what differentiates an FHA appraisal?

It all boils down to the underwriting requirements of FHA insured mortgage. The FHA requirements are different from those used for a conventional mortgage. These FHA requirements are stricter and may disqualify a home from the FHA program altogether. An example of a condition that would disqualify a home from the FHA program would be environmental contaminants, noxious odors, proximate location near an oil well, high-powered transmission lines, or anything that is clearly a health and safety violation.

Many requirements extend to a property’s eligibility for an FHA insured mortgage if not corrected or repaired. One example is the roof. A home may have a maximum of three layers of roofing. However, if more than two layers exist and repair is necessary or there is less than two years of remaining physical life, all of the old roofing must be removed as part of the re-roofing. Also, a home with a flat roof must be inspected by a qualified roofing inspector.

Another example are the private water and septic systems. They are allowable as long as they are functioning; meet the required setbacks and the requirements of the local health department. However, connection to public water and sewer must be made if the total cost to connect is 3% or less than the estimated value of the property. Furthermore, FHA requires that shared wells service no more than four properties and a shared well must have a shared well agreement in title and that agreement shall also be recorded in a deed or public records.

One more difference between the FHA and conventional appraisal are the reporting of the physical improvements, i.e. home or condominium. The most confusing of the guidelines is how the FHA considers gross living area (GLA). The GLA is the total area of above-grade residential space. Above-grade living space is the area above a crawl space or a basement. Finished basements or attics are not included in the GLA, however their existence, size, quality, and functionality are valued.

According to FHA requirements, basement space does not count as habitable space unless certain criteria are met. For example, basement bedrooms must have a window, the windowsill must be no higher than 44 inches from the floor, the window must have a clear opening of at least 24 inches wide and 36 inches in height and the window must be at ground level or higher or have appropriate window wells.

The above examples are just a few of the FHA requirements pertaining to single-family housing. There are many more FHA requirements and issues regarding eligibility. A copy of the FHA Handbook (4150.2), in Word or PDF format, is available on the HUD website.

Thanks for reading.

• Seattle Real Estate Appraisal Information , Uncategorized
• Comments(0)

C. Edward Boyle July 18th, 2008

What can we expect that gas prices will do to real estate? This is an interesting question, and the answers may prove to be “a great deal” over time.

A part of the reason for suburban sprawl comes from people trading high commute times and costs for lower home prices and a different quality of living in the ‘burbs. Many folks think it is better for variety of reasons. But now the cost of commuting is growing quite rapidly. Someone who drives from Marysville into Seattle on a daily basis not only contends with the growing congestion on I-5, but has had the monetary cost of their commute double over just a few years. Of course tires, oil changes, repairs and maintenance are all over and above this and driving more miles means more of these costs.

Diesel, for some reason, costs more than gas (it didn’t used to), and is tucked in there just under $5.00/gallon and rising. Truckers drive rigs that typically get 7 miles to the gallon. This meanins over $0.70/mile, just for fuel.

What are the reasonable guesses for the future?

1. More people will opt to ether stay in the city, near their jobs, or move closer to the job. This will, of course, increase demand for “close in property”. The opposite effect of lessening demand for properties that require long commutes can also be expected, but not to the equivalent degree so long as overall population growth continues. The trend toward attached housing will continue in order to create more density in the urban areas. People will accept condo, townhouse, and apartment living to a greater degree than at present.

2. The costs of shipping goods will be mitigated by more water or rail traffic, with trucks being used for shorter hauls. This may result in mega-distribution centers fading away in favor of smaller, more local distribution centers, as one example of a result. It could also mean that large suburban shopping centers would become less prevalent, with their functions taken over by smaller, more localized strip malls. It may also mean that west coast ports will see a reduction in growth as more efficient ships take goods directly to east coast ports rather than truck the Asian-made goods across country.

3. Free time activities will be more locally concentrated, and the popularity of “out of the way” places will diminish as they become less affordable to reach. It may well include a per capita reduction in flying due to rising airline costs and the plethora of reduced servies and higher fees coupled with increasing inconvenience.

4. Telecommuting, teleconferencing, and other electronic methods of meeting will continue to escalate at the cost of fewer face-to-face meetings in the businesses and industries that allow for it, and this includes more work-from-home activities (at least part of the time).

5. Some enterprises will alter the way that they do business, entirely. More and more businesses will charge their customers “trip fees”, and why not if it costs both time and a lot of fuel. Maybe your local Realtor will not spend a day hauling you around an area to look at a bunch of houses, but rather will have you select just one or two from video presentations before burning gas. Maybe there will be a dollar aded to the price of a home-delivered pizza. Lettuce and frit from California will permanently cost more. Home mail delivery could be reduced to fewer days per week. You might even finding yourself riding a bus or a light rail to some of your destinations, moving your home, and selling one of your cars. How will these changes impact real estate demand and land use?

The list of possible impacts is much longer than this, but these are just pointed out as a variety of diverse probabilities and possibilities. What is certain, though, is that people will naturally migrate toward a less energy consumptive lifestyle as energy costs rise.

The first changes to make will probably come from changing transportation costs. And the purpose of all transportation is to move someone or something from one piece of real estate to another. How, in your opinion, will the real estate be changed by transportation changes?

• Uncategorized
• Comments(1)