Appraisal News
Not All Home Improvement Projects Yield Returns, Appraisal Institute
President Warns Homeowners
Homeowners looking to upgrade or sell their home this spring should realize
that not all remodeling and renovation projects will yield a full return
on their investment, the president of the Appraisal Institute said today.
The Appraisal Institute is the nation’s largest organization of real
estate appraisers.
“When it comes to home improvement projects, especially in today’s economy,
not every renovation or remodeling effort will pay off when the owner
sells their home,” said Appraisal Institute President Leslie Sellers,
MAI, SRA. “Consumers need to be aware that cost does not necessarily
equal value.”
For consumers looking to upgrade and possibly sell their houses this
spring, Sellers has put together a quick list of advice that real estate
appraisers often share with homeowners.
Here are “Leslie Sellers’ Tips for Home Sellers”:
• Emphasize the essentials over the extras by investing in basic upgrades,
such as fresh paint (use neutral colors) and new fixtures.
• Know that curb appeal is vital; exterior projects can sometimes provide
a greater return on investment than interior projects.
• Avoid over-improvement by sticking to what's proportional in your neighborhood.
• Consider adding a bathroom, bedroom or renovating the kitchen, which
are appealing features for home buyers.
• Projects that add square footage to bring a house up to – but not significantly
beyond – community norms typically yield good returns.
Sellers also recommends that homeowners who are serious about knowing
their home’s value hire a professional real estate appraiser. Appraisers
can help by providing honest, ethical valuation advice regarding which
renovation projects will yield the greatest return on investment.
“Smart financial choices start by knowing what’s standard in a community
and how to improve a home so that the homeowner can maximize return on
investment while limiting liabilities,” Sellers said. “Getting accurate
knowledge of how different improvements can impact the value of your
property is where hiring a professional real estate appraiser with local
market knowledge can help determine which home renovations make the most
dollars and sense.”
Appraisers provide unbiased, data-supported opinions of value that are
governed by a federally-mandated professional code of practice. An appraiser
can help a homeowner consider different renovation options by conducting
a feasibility study, in which the appraiser will analyze the homeowner’s
property, weigh the cost of rehabilitation and provide an estimate of
the property's value both before and after the improvement.
To locate a professional appraiser in your area, visit www.appraisalinstitute.org/findappraiser.
For more consumer advice on remodeling and renovating your home, download
this helpful brochure from the Appraisal Institute www.appraisalinstitute.org/findappraiser/brochures/Rmdlng_n_Rhab.aspx.
Fed Says Borrowing Costs will Remain Low Despite Key Rate Hike
The Federal Reserve has raised an interest rate it charges banks for
emergency loans, thus beginning the process to wean the banking industry
from government assistance while simultaneously trying to convince the
public that the move does not represent an imminent tightening of credit.
On Feb. 19, the Fed officially increased the discount rate charged to
banks for direct loans by a quarter point to 0.75 percent.
“(This change is) intended as a further normalization of the Federal
Reserve’s lending facilities,” the central bank said in a Feb. 18 news
release. “The modifications are not expected to lead to tighter financial
conditions for households and businesses and do not signal any change
in the outlook for the economy or for monetary policy.”
Despite the Fed’s reassurances, stock futures and bond prices fell,
and the dollar rose against the euro as economists saw the central bank’s
move as a “shot across the bow,” according to a Feb. 19 story in The
Wall Street Journal.
With the Fed’s announcement, the gap between the fed-funds rate – which
as a Fed-influenced rate dictating what banks charge each other on overnight
loans serves as one of the central bank’s main policy tools – and the
discount rate will now be a half percentage point, up from a quarter
percentage point.
Before the crisis, the discount rate was a full percentage point above
the fed-funds rate, a penalty meant to discourage banks from using it
except in extreme conditions. In the early stages of the financial crisis
in August 2007, the Fed had greatly reduced the gap between the two rates
to encourage banks to borrow, according to the Journal.
But now, with financial institutions’ reliance on Fed credit waning
as market liquidity continues to improve, the Fed felt the time was right
to act. Fed governor Elizabeth Duke justified her agency’s policy changes
in remarks she delivered on Feb. 18.
"I'd emphasize that the changes are simply a reversal of the spread
reduction we made to combat stigma,” Duke said. “And like the closure
of a number of extraordinary credit programs earlier this month, represent
further normalization of the Federal Reserve's lending facilities."
Bill Raises Appraisal Management Company Standards in Arizona
Arizona Governor Brewer signed Senate Bill 1351, regulation of appraisal
management companies (commonly known as AMC’s), on May 11th, 2010. The
law becomes effective July 29th, 2010. The State Board of Appraisal
must write rules to implement the legislation.
You can read the bill, the summary and get information on how your legislator
voted by going to http://www.azleg.gov/DocumentsForBill.asp?Bill_Number=1351&image.x=0&image.y=0
Oregon Property Appraisals including the Portland Metropolitan Area
plus all of Multnomah, Washington, Clackamas, Yamhill and Columbia Counties
