Tax abatements, Obtaining a Divorce Appraisal, "Does recessed lighting add value" and should I wait until spring to sell"?
Home seller: Should I wait until spring to sell my house" (note: this person is located in Greater Manchester, NH)
Jack: If your house is prepared to sell (cleaned, repaired, de-cluttered etc) I would NOT wait to sell. There is currently a shortage of houses on the market in many sectors. There are a reasonable amount of buyers out looking. Certainly more buyers will join the market in the spring, but along with many more listings (houses on the market). Inventory is low, so you many be able to take advantage of a window of opportunity. (Note: Before listing your house, you want to see what the inventory/competition is for your market as each market is different).
Homeowner going through divorce: Do we each have to get our own appraisal?
Jack: There is no rule that says anyone needs to get an appraisal, however if you are contesting the value each side certainly ought to get one to protect their interest and make sure they have the most updated information with regards to the market value of the house. I have done many “joint” client appraisals in which the divorcing couple hires me together as an independent appraiser. In an amicable situation, I think that is a great idea. Just beware, that if you don’t like the results, your spouse can submit the appraisal into court as evidence.
Homeowner: Does recessed lighting, crown molding etc add value to a house? How much?.
Jack: While it is very difficult to nail down the precise difference in value attributed to one features (lets say recessed lighting versus traditional), it does go toward the overall quality of the house. It is the goal of the appraiser to compare houses of similar quality, which means your house would be compared to a better grade of house than houses that do not have similar quality features. When evaluation quality, SOME of the characteristics are; exterior ornamentation, interior refinements/detail and quality, ceiling height, quality of finish materials, efficiency of systems (heat, electrical etc) and much more. While one item by itself may not change the value by itself, it does go to the overall quality of the house.
Property taxpayer: When is the deadline for to appeal my property taxes?
Jack: The deadline for all New Hampshire municipalities is March 1, 2016 for appealing your 2015 taxes. The date is a “hard date” and will not be extended. The municipality has until July 1, 2016 to either grant or deny your request. If they do not act on it, is automatically considered “denied”. Similar to presidential “desk veto”. If your abatement application is denied, you can appeal it to either the State of New Hampshire Board of Land and Tax Appeals (BTLA) or the New Hampshire Superior Court. The following is a link to the New Hampshire tax abatement form.
If you have any questions on real estate, appraisal or finance questions don’t hesitate to contact me at (603) 644-1000 or email me at: firstname.lastname@example.org. Check out my website at www.AppraiserNH.com
My first “Monday Mail Bag” post. Every week I field many questions from brokers, mortgage professionals, homeowners/buyer, attorneys and other interested parties in real estate. On Mondays I will share some of the questions and answers. Here we go:
Q#1 – Broker: I have buyer considering purchasing a 2-family in Manchester. It is assessed as a 2-family, but does not have a certificate of compliance. The current owner has lived in the property since 1948 and says it is “grandfathered”. Do my buyers need to get a new Certificate of compliance?
Jack: YES!!! In the late 1980s when the Certificate of compliance (COC) program came into effect for rental properties, the city grandfathered 2-4 unit properties that were owner occupied for as long as that owner lived in the building and retained ownership. Any new buyer must obtain a new COC. A buyer will have to do some due diligence as some of the items, emergency exits, electrical, smoke detectors etc. can be expensive. There may be an issue with the financing since the buyer will being doing the work after closing. It would have been smart for the seller to obtain the COC prior to listing the property to appeal to a broader group of buyers. (note: Link to Manchester NH housing code: https://www.manchesternh.gov/pcd/Regulations/HousingCodeOrdinance.pdf )
Q#2 – Mortgage Professional: Does FHA allow “Driven Point Wells” for drinking water?
Jack: Yes, they are allowed however they must meet the Private well guidelines set forth in the HUD Handbook 4000.1 The handbook does not specifically address driven point wells therefore they are acceptable providing the local municipality allows them, it is an approved well and meets the current setback and flow guidelines. If the town allows it, and it meets all the other criteria, then HUD will accept it. HUD and the mortgage investor will most likely want to see evidence (by showing comparables) that other properties have this type of well.
Q#3 – Homeowner/Seller: The IRS has agreed to release a lien on my house I am selling and they have asked for an appraisal. Do I need to get my own or can I use the one the buyers are getting from the mortgage company
Jack: You really should get your own appraisal for several reasons. 1) The IRS has different definition of value called “Fair Market Value” which is different than Fannie Mae’s definition of “Market Value”. 2) The mortgage appraisal does not come with the permission to use for another use such as having the lien released by the IRS. 3) If the IRS questions the appraisal you will want to have YOUR appraiser available to back up his/her appraisal. There is not incentive for the bank appraiser to do so since you are not their client. Getting an IRS lien is a BIG deal. It is worth the money for your own appraisal.
If you have any real estate, appraisal, investing or financing related questions don’t hesitate to call Jack Lavoie, SRA at (603) 644-1000 or email at: email@example.com
Here are a FEW of the questions I fielded this week:
Homeowner (who is also a broker): We are thinking of adding an enclosed porch, but not sure if we will get a return on our investment. Do you think will get our money back?
Jack: You actually have two questions there. Should you build the porch? And will you get your money back (in increased value or resale)? With regards to the latter, it is quite possible you won't get a dollar for dollar return. As a general rule, when you cure a problem (I.e. Fix something that's broke) you often get more than a dollar for dollar return. When you add features that are beyond what the "typical house" has, it generally costs more than what you will get in increased value. If you are adding a feature that is expected in the market that nearly all competing houses have, you probably will get full value back. With regards to the enclosed porch, it may only increase the value a 1/3 to 2/3 of the cost of house. So, in answering your second question, the answer is NO (you will NOT get all your $$ back). As to whether or not you will do it, it is a function of how long and how often you will use and home much enjoyment it brings you. As an example, if it costs $18,000 and you only get a $9,000 return, but you enjoy the porch for the next 10 years, than I would say "Who cares" if you don't get your money back in resale, since you have gotten your value back in the way of enjoyment.
Homeowner: I have a 4.375 interest rate. Does it make sense to refinance?
Jack: first of all, I am not a mortgage expert, but I can give you this general advice. Whether or not you refi is a function of your new interest rate, the new loan costs and how long you expect to own the property. This is how you calculate savings and break even. Let's say you are going to save 1/2 percent on your rate and you have a $200,000 mortgage. That means you will save $1,000 (1/2 of 1 percent) on annual interest. If the cost of the loan is $2,000, it would take you 2 years to break even. If you plan on owning the property for more than 2 years it probably makes sense. Many lenders with also do a no closing costs loan in which they will incur the cost themselves and build those costs into the new interest rate, which will be higher than if you paid the cost. So, if you are not sure how long you will own your house, you may pay no closing costs and just lower the rate to just 4 percent (as an example). Nothing to scoff at since even lowering 0.375 percent will save you $750 per year in interest or $63 per month. Not bad for "free money". Lastly, I BEG you to use a LOCAL lender. Don't get tricked into thinking these national online lenders are better.