Money Advice Guide

A new report by the independent Demos group has revealed what may not be a surprise to many people - corruption is rampant in the home appraisal industry. The bust in the dot-com market of some five years ago has left would-be lenders with a surplus of cash to lend. This has led to a huge boom in both mortgage and home equity loan lending. That’s not a bad thing; a record 69% of Americans now own their own homes. Owning a home is easier than ever; in 2004 the average down payment was a record low of only three percent.

So if everyone is buying a home, and loans are easier to obtain than ever, what is the problem? The problem is that nearly 55% of the appraisers polled in the survey said that they had been pressured by lenders to deliver appraisals that met a “target” value. The appraisers said that failure to meet the “target” value resulted in either their not being paid, or not being hired again. Since most appraisers want to keep working, they have had a tendency to meet the target value, even if it means that they have overestimated the value of the property. This drives prices artificially higher and leaves many homeowners with mortgages that may be worth more than the homes they were meant to finance. This problem becomes acute should the owner need to sell the home, only to discover that it isn’t worth as much as he or she owes on it.

The worst-case scenario to result from this would be a burst in the current real estate “bubble” and a nationwide collapse in home values, leading to massive foreclosures. This probably will not happen, but there are several things prospective borrowers can do to avoid being caught in the appraisal trap:

*Become educated about the appraisal and lending process. The more informed you are, the less likely you are to be caught in a scam.

*Be aware that refinancing your home isn’t a cure to all problems. It may seem appealing to use the equity in your home for such uses as debt consolidation but if the result of that is that you owe more on your home than it is worth, you probably haven’t gained anything.

*Be active in the appraisal process. Talk to the appraiser, and ask to see the finished appraisal, along with the data used to create it. Appraisals are based in part on the sales of similar properties in your area. Check them out yourself and compare the home you saw with the stated appraisal value.

*Be bold. Ask your lender if they pressure their appraisers to provide inflated values. You might not get an honest answer, but pay attention to how they respond. You might be able to determine if they are lying.

Ultimately, if you take out a home equity loan or a mortgage for more than your home is worth, you are the one that suffers. That can be easily avoided if you simply pay more attention to the process and educate yourself about the possible pitfalls. The last thing you want to lose is your home.

©Copyright 2005 by Retro Marketing. Charles Essmeier is the owner of Retro Marketing, a firm devoted to informational Websites, including http://www.End-Your-Debt.com/ and http://www.HomeEquityHelp.net/

Tags: debt consolidation, home appraisa, home equity loan, line of credit, second mortgage, tax deductibledebt consolidation, home appraisa, home equity loan, line of credit, second mortgage, tax deductible

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Real estate prices have hit record levels in the United States during the last five years. In some parts of the country, prices have tripled. For those selling houses in the first half of the decade, business was very good, indeed. Rising interest rates and sticker shock have slowed the market down, however. In some parts of the country that used to be hot, sales have slowed to a crawl. In those markets, people who want to sell houses are now waiting months when homes used to sell in days or weeks. What can a homeowner who wishes to sell as quickly as possible do to accelerate the process?

A relatively new service called home staging may be the answer. Staging a home essentially means setting it up so that it makes its best possible presentation to the market. Professional home stagers will, for a fee, come to your house, examine your property, and make recommendations as to what you might do in order to make the house as sale-friendly as possible. In some cases, they will simply recommend a coat of paint, a bit of landscaping, or some new drapes. In other cases, more dramatic help may be needed.

It is often difficult to sell a home that has been vacant for a while. Buyers have a hard time imagining what their belongings might look like in an empty house. A good staging company will have in their inventory a selection of different types of furniture, lamps, decorative accessories and more so that a vacant home can look like a showcase. A fully and tastefully decorated home is much easier to sell than a vacant one.

The service isn’t necessarily inexpensive. Homeowners might expect to pay several hundred dollars for an initial consultation as well as a fee of several times that amount for the first month of a fully furnished, professionally decorated home. Rates for subsequent months tend to be lower than for the initial month, but many homes that have been professionally staged aren’t on the market much longer than a month. In fact, studies have shown that staged homes often sell in half of the time of other comparable properties.

Having your home professionally decorated in order to sell it isn’t something that everyone needs to do. But in markets with slowing real estate sales, staging a home may be the difference between selling the house this week and selling it three months from now. For many sellers, the investment is more than worthwhile.

Tags: debt consolidation, home appraisa, home equity loan, line of credit, second mortgage, tax deductibledebt consolidation, home appraisa, home equity loan, line of credit, second mortgage, tax deductible

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