Category Archives: real estate appraisal

San Diego home sales up for first time in a year

San Diego County’s housing market picked up in July with sales rising 10.1 percent from a year ago as the median home price stayed flat, real estate tracker CoreLogic said Wednesday.

The $580,000 median home price in July, showing no gain from the year before, was down from the all-time high of $590,000 the previous month.

Even with flat home prices, there was a shift in the market that may show lower mortgage interest rates are having an affect. There were 3,988 home sales in July, up by 365 from the same time last year. It was the first time in 14 months that there were more sales than the year before. Of note was that there was one extra recording date this July than last July.

Here is how the San Diego market fared by home type in July:

Resale single-family homes: The median price was $629,000, down from the peak of $649,000 reached last month. There were 2,515 sales, 195 fewer than July 2018.

Resale condos: The median price was $435,000, down from the peak of $437,000 last month. There were 1,117 home sales, 34 more from the same time last year.

Newly built homes: The median was $701,250, down from the all-time high of $812,500 reached in October 2018. There were 365 home sales, up by 136 from the same time last year.

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Appraisal Contingency protects buyer, enables purchase price reduction

Appraised value: $380,000.

Mortgage amount: $342,000.

Purchase price: $396,000.

Mortgage type: 30-year fixed.

Rate: 4.375 percent, no points.

Backstory: My clients were first-time home buyers and looking in Richmond for a home to accommodate their growing family. Their agent, Felipe Acobes with Better Homes and Gardens Real Estate in Oakland, located a three-bedroom, two-bathroom home that met all of their requirements.

However, the property had its complexities. There was a partially finished garage and a bonus room — both done without any permits — and a significant amount of deferred maintenance. The list price was $399,000, a price that was expected to be overbid.

The buyers offered $428,800, which was accepted. In this competitive market, it is not uncommon for buyers to pay a price that does not discount the existence of non-permitted improvements and defects.

When this happens, the appraised value at times does not justify the purchase price.

In these cases, the buyer may be willing and able to increase their down payment to make up the difference. In this instance, the buyers were already getting gift funds from relatives for their 10 percent down payment and to cover closing costs, so they had little ability to bridge any price/appraisal gap.

Fortunately, Acobes had placed an appraisal contingency into the offer to protect the buyers in case of a value under offer price.

Because of the property permits and repairs issues, the appraised value came in at $380,000. Acobes was able to work with the seller to renegotiate the property price down to $396,000. Without this renegotiated price, the buyers would have had to bring in a down payment of $86,800. Instead, they just needed to bring in $54,000, something they were able to do.

Buyers are often advised that they will be more competitive if they don’t have contingencies for things like financing, appraisal or inspections. In most cases, this works out fine. But in cases in which the buyer’s agent recognizes a potential appraisal problem, a prudent Realtor will work to structure an offer that appeases the lender, protects the buyer and results in a transaction that works for the seller.

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San Diego home sales drop to lowest point since 2007

San Diego County home sales dropped 17.5 percent to the lowest level in 11 years for a September in the first significant sign of a slowdown in the market, real estate tracker CoreLogic reported Tuesday.

Last month, 2,942 homes sold in the county, down from 3,568 sales a year ago. It was the lowest number of sales for a September since just before the Great Recession when 2,152 sold in September 2007. Also, last month’s median home price dropped to $575,000 — the first decrease since January — after hitting an all-time high of $583,000 in August.

Most experts attributed the slowdown to a rise in mortgage interest rates, and the sale price reduction to potential buyers balking at higher monthly payments.

“Mortgage rates (are) another thing that is going to add cost, and temper demand,” said Cheryl Young, senior economist at Trulia. “Rates are hovering around a seven-year high so people are really, possibly, taking a step back before they jump into home buying.”

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