Articles & Newsletter

December, 2005


In This Issue:
Your Kitchen or Bathroom Remodeling Off to a Good Start
Real Estate Q & A
Wireless Home Networks Deliver the Internet
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Hello! we hope you enjoy the latest edition of our Real Estate Newsletter.

From Howard's Our City Weston Monthly Magazine Editorial -

 

How Appraisals Can Affect Your Sale

By Howard J. Willis *

 Appraisals are an often misunderstood element in the purchase and sale process. Both sellers and buyers sometimes tend to underestimate how much lenders rely on appraisals to protect their interests in managing their risks. By considering how and when the appraisal process applies and the potential impact it may have on the final sale price, the savvy seller and buyer will know how to price their “product” and how to react when questions arise.   

What is an Appraisal?

An appraisal is a professional appraiser's opinion of a property or asset’s value. The preparation of an appraisal involves research into the local market and the knowledge, experience and judgment of the appraiser. The appraiser’s role is to provide an unbiased opinion about the value of a particular property. Investors and lending institutions rely on the appraiser in order to determine how much money one can invest or lend on the property. The actual appraisal is usually a written report consisting of a description of the property and the general area and a review of recent sales of comparable properties. The final result is a specific dollar price opinion of today’s value of the property. 

When is an Appraisal Needed?

One key condition usually found in a buyer’s offer is that the buyer must apply for and obtain a loan commitment within a fixed number of days. If the buyer cannot do so for whatever the reason, the buyer can notify the seller, terminate the sale agreement and ask for the earnest money deposit back. When the buyer applied for a mortgage and loan, the lending official orders the appraisal and the buyer becomes responsible to pay for the report.  The mortgage banker made the appraisal a requirement in obtaining the loan by the buyer, so the appraisal now becomes part of the lender’s criteria in approving or rejecting the loan request. 

Case in Point * To illustrate the role of the appraisal in a typical Weston transaction, the following fictional scenario may serve as a case in point. Joe and Sarah Wallace entered into a contract to purchase a home listed for $585,000 from Jose and Maya Garcia.  Prior to listing their home, the Garcia’s interviewed several Realtors and had long discussions about the asking price. They paid 325,000 four years ago for their home, they knew prices had really increased in Weston and they wanted to be sure they made as much as possible.  Each Realtors CMA ranged from an average of $526,500 to $557,750. The sellers finally selected Anne, the Realtor who said she could sell the home at just about any price they wanted. The Garcias said they wanted to get at least $585,000 so that’s the price Anne used. After Anne listed the home some time later there were two offers that she presented to the sellers.  

Joe and Sarah’s Realtor ran a CMA and told them that the home was overpriced and that it shouldn’t be worth more than about $550,000. The Wallace’s were concerned that their offer may not be accepted so they offered $560,000.  Anne told the buyers that her sellers had countered at $580,000 and later the buyers accepted the $580,000.  Joy Beth, the mortgage banker, was concerned that their application was for a 90% mortgage and in the Weston environment she knew that lenders had become more demanding and concerned about their risk in properties holding their value.  When the appraisal report came back to Joy Beth, the estimated value was $560,000. Jose and Maria were furious and said “so what, that’s just one guy’s opinion, we’re not lowering the price.”  Anne explained to her sellers that that if the two parties could not agree on a price then the buyers could walk and they would continue marketing the home.  The Garcia’s instructed Anne to tell the Wallace’s that they would just have to pay the difference of $20,000.  Meanwhile, Joy Beth discovered a memo in the lender’s conditional approval that she needed to have the appraiser go back and find at least one more comparable sale in the last 60 days to support the appraisal as it was about $10,000 over the highest comparable sale in the last six months. The loan’s underwriter told Joy Beth that the lender was concerned about two things: the Wallace’s were only putting 10% down or $56,000 and that Weston prices had been increasing at such a rate that they had to be more conservative in case there was a cooling off in demand and prices.  When Joy Beth called the appraiser, he was dumbfounded, saying “there are no other comparable homes with the same number of bedrooms.”  Later, the appraiser provided an acceptable comparable sale but now there were only two days remaining on the 30 day approval period in the contract. The Wallace’s were concerned that they had only $60,000 available to put on the down payment. The Garcia’s were upset at the thought of going back on the market and not knowing if they would face the same situation again. The Realtors coordinated a series of conversations between the buyers and sellers who agreed to a new price of $565,000.

Real Estate: Risk and Reward

There are many variations on this depiction of how a purchase and sale can evolve. Each party is taking a risk in terms of actual cash paid and received, the quality and credit worthiness of the buyer, and the market’s tolerance of aggressive pricing.  While there is a trend to limit or even eliminate appraisals in the purchase conditions, the fact remains that there are a limited number of buyers who are all cash buyers. Likewise, there are few buyers who can meet the loan down payment plus later potentially face paying more in case the appraised value comes in below the asking price. The informed seller can limit the potential risks of aggressive pricing by staying within a reasonable margin of the highest comparable sales.  The informed buyer is prepared for the limited leverage in a seller’s market and knows there is a risk in losing a desired home if there are other buyers who have the cash to complete a sale.    

 * Fictitious names used in a combination of actual events

Howard Willis, J.D. is a realtor affiliated with Esslinger–Wooten–Maxwell Realtors. He and his wife Allegra reside in Weston where they specialize in providing real estate services to premium and luxury homeowners.  You can learn more at www.thewillisgroup.com or contact Howard at (954) 949-0444. 

 

 

Get Your Kitchen or Bathroom Remodeling Off to a Good Start

(ARA) - The decision has been made. You’ve decided that the time has come to turn your dream kitchen or bathroom into a reality. Great! Now what?

The Beginning

Your first step should be locating and hiring a professional kitchen/bathroom designer from the National Kitchen & Bath Association (NKBA). What can a professional do for you? Plenty.

A kitchen/bathroom specialist can guide you through every phase of your project -- decorating, design, construction, and plumbing and electrical systems. Specifically, kitchen/bathroom specialists are able to:

  • Work with contractors, electricians and plumbers.
  • Answer any questions you have about design, products and colors, as well as anticipate and prevent problems that you may not have considered.
  • Create designs that reflect your individual personality through color, style and pattern selection.

NKBA provides a list of its members, including Certified Kitchen and Bathroom Designers (CKDs and CBDs) in your area who can help you with your project.

The Middle

The NKBA suggests that you prepare for your visit. Here’s how:

  • Collect and clip photographs of kitchens or bathrooms that appeal to you. Examining these with the designers during your visits will give them a good idea of the styles to which you are attracted.
  • Evaluate your current kitchen or bathroom to find out what works and what doesn’t. For example, is there enough cabinet shelf space? Is there enough counter space? Is there adequate task lighting near the countertop? In the bathroom, is the bathtub big enough? Is the showerhead at a comfortable height for all users? Is the bathroom safe? Does it include grab bars and non-slip flooring?
  • Write down the answers to these questions, and bring them with you when you visit the kitchen/bathroom planner. They will play an important role in the design of your new space.

The Completion

After you choose a firm, a designer will visit your home to take precise measurements. He or she will also spend a great deal of time interviewing you to discover the exact type of style of kitchen or bathroom you desire. Then, a plan which includes material costs, specifications and the design drawing will be prepared. When the design is approved and the budget is set, a payment schedule will be arranged. NKBA member firms will usually offer a contract that outlines project responsibilities and a payment schedule.

The time frame for completion of projects will vary. Generally, kitchen and bathroom projects take two weeks to several months to complete. Although living with construction is not easy, it will all seem worth it once your new kitchen or bathroom is complete.

To obtain a list of NKBA member firms in your area and a free workbook, call (877) NKBA-PRO (652-2776).

Courtesy of ARA Content

 

Real Estate Q & A

 

QUESTION:

If you make an offer on a house and the owner comes back with a counter offer and you agree to it can the owner still change his mind and sell to someone else?

ANSWER:

A seller is free to withdraw the counter-offer any time prior to your acceptance of it. The communication method for acceptance is usually described in the contract. If your acceptance was communicated to the seller in the method required by the contract (prior to the seller withdrawing the offer), the seller should honor the contract with you and not entertain other offers.

If the seller does not honor the contract, then t he problem then becomes whether you try to enforce your contract or not, which requires legal advice and expenses.

 

Shop, Surf or Send: Wireless Home Networks Deliver the Internet

(ARA) - The Internet is becoming as necessary as electricity and indoor plumbing. As its usefulness grows, so does the need to deliver a fast, reliable Internet connection to PCs and other home appliances.

Whether it’s downloading directions, instant messaging, uploading your favorite photos or simply sending e-mails with attachments, the Internet is the backbone of modern communication. Today, access to it is as critical at home as it is in the workplace. For that reason, many new homes are built with telephone, cable and Category 5 (Ethernet data cable) wiring bundles; making high-speed data transfer only a plug-in away. However, most people don’t have the convenience of Ethernet jacks throughout their homes, resulting in expensive and messy data cable installations. In 2002, more than 1.5 million homeowners installed their own wireless network, and if Jupiter Research is right, these wireless networks will surpass wired ones by 2005.

The Web’s transition from a place for text and images to one that includes a repository of video, animation and audio is proceeding rapidly. New uses of the Web require higher-speed Internet connections, and its usefulness is greatly enhanced by the ability to share those connections.

The evolution of wireless technology reflects that “need for speed,” as the newest generation of products categorized as 802.11g are typically five times faster than the older technology (802.11b). The new 802.11g technology is compatible with earlier products and handles data transfer typically at 54 mega bits per second (Mbps) compared to 11 Mbps of 802.11b. However, products from U.S. Robotics 802.11g Wireless Turbo family perform at an incredible 100 Mbps with the company’s exclusive Accelerator Technology. At these blazing speeds, downloading MP3s, streaming video, large audio clips and uploading big files is quick and painless.

What’s Needed?

Creating a reliable, wireless network requires only three things. First on the list is an Internet connection. While broadband (DSL or Cable Internet) is a necessity for high-speed downloads, dial-up can work if wireless connectivity is the main goal. With broadband, the service likely has a modem device (with a single Ethernet port to connect to the computer), or a router (with multiple-Ethernet ports).

The second thing you need is a wireless access point or router. That piece of equipment allows you to share the broadband connection wirelessly. If you have an integrated router/broadband modem you will only need an access point. If you have a single port broadband modem, you will need an access point with an integrated router. You will also need a wireless card or adaptor to allow PCs and other devices to access the wireless network. They come in three basic formats: PC cards for laptops, PCI cards for desktop PCs, and USB for any machine that supports USB. Installing a network is relatively easy and will dramatically change the way the Internet is used at home.

Look Ma, No Wires!

The beauty of wireless connectivity is that it provides an inexpensive and relatively simple way to share Internet connectivity, files, printers and other devices within a home. No new wires! In purchasing a network’s components, the following should be taken into consideration.

  • Speed -- Faster is better. It may not make much difference today, but it will later.
  • Security -- There are several techniques to provide security for a wireless network and the higher-bit encryption numbers offer better security.
  • Compatibility -- 802.11g devices run at a minimum of 54Mbps, and are typically compatible with the older 11Mbps 802.11b products but not with 22Mbps 802.11b+ products.
  • Coverage -- Pay attention to what vendors say (or don’t say) about the size of coverage areas.
  • Reputation -- Go with a company that you are confident will be around in the future. Over time these products often can be upgraded with software enhancements that provide improved performance or new features.

Setting up your wireless network is easier than putting together a child’s first bicycle and will be an important addition to your home for many years to come.

For more information about wireless networking products, visit www.usr.com/lookma-nowires and go wireless today! Products from U.S. Robotics 802.11g Wireless Turbo family are also available for purchase at Wal-Mart stores nationwide.

Courtesy of ARA Content

                                                    

 


     Allegra Garces Willis  

    Realtor   

        954-288-6667       

      allegra@thewillisgroup.com

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Allegra Willis Real Estate Group 7080 W. State Road 84 Suite 7 Fort Lauderdale, FL 33317
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