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Appraising Your Virginia Beach Real Estate, Part II

Final Estimate of Value

Once the appraiser has applied the three approaches to the appraisal of your Virginia Beach real estate, he/she must decide which of them is the most reliable and most closely follows the actions of the market. For residential properties, the Sales Comparison Analysis is typically the most reliable. For commercial or industrial properties, all three techniques (or portions of one or more) may be reliable. The appraiser reconciles the various aspects of each technique into what he or she believes produces a credible and supportable opinion of value. The result is the Final Value Estimate, which, depending on the needs of the client, may be expressed as a single number or a range of value.

What If It’s Low?

If the appraisal of your Virginia Beach real estate comes in low, that doesn?t necessarily mean that you can?t complete the transaction. Your options to rectify the situation included the following:

1. You can make up the difference in cash.
2. The seller can lower the price.
3. The seller can carry a second mortgage for the difference.
4. You can order a second appraisal
5. You can supply a list of comparable sales and ask for a review of the appraisal.

What Does It Include?

Under the Equal Credit Opportunity Act, your lender must furnish you with a copy of the appraisal of your Virginia Beach real estate if you request one in writing. Appraisals are very detailed reports, but they should include the following:

• Details about the subject property, along with side-by-side comparisons of three similar properties.

• An evaluation of the overall real estate market in the area.

• Statements about issues the appraiser feels are harmful to the property’s value, such as poor access to the property.

• An estimate of the average sales time for the property.

• What type of area the home is in (a development, stand alone acreage, etc.).

Do remember that an appraisal of your Virginia Beach real estate is not a home inspection and cannot be considered a guarantee that the property is in good condition. Appraisers make notes about obvious problems, but they do not perform tasks done by certified home inspectors.

Appraising Your Virginia Beach Real Estate, Part I

Appraising Your Virginia Beach Real Estate, Part I

A vital step in the home buying process is a professional appraisal of the Virginia Beach real estate you wish to purchase. An appraisal is an objective analysis of the property?s market value and is required by lenders to make certain that the property is worth at least as much as the amount of the loan you are requesting. Your personal approval is accomplished early in the loan process, but final commitment usually hinges on a satisfactory appraisal, and the lender will study the completed report carefully before determining whether or not the piece of real estate qualifies to serve as security for your loan.

Appraisers are experienced and knowledgeable professionals whom are licensed by the state to estimate real estate values. They must follow rules set forth in the Uniform Standards of Professional Appraisal Practice (USPAP). Once the appraiser has determined the highest and best use of the Virginia Beach real estate, i.e. the most profitable utilization of the property, he/she will then go about estimating the home?s market value through the use of three basic approaches.

The Cost Approach

The Cost Approach: a set of procedures through which a value indication is derived by estimating the current cost to construct a reproduction of the existing structure, deducting the accrued depreciation and adding the estimated land value. The principle of substitution is the basis of the cost approach, in that no rational person will pay more for a property than the amount for which he can obtain, by purchase of a site and construction of a building, with undue delay, a property of equal desirability and utility. Appraisers typically make use of published cost figures when calculating the cost to construct a building. These sources of data are available online and in printed form. Land value is determined by a comparison of the subject site with other similar sites that have recently sold.

The Sales Comparison Analysis

While cost and income considerations are important, the Sales Comparison Analysis is regard as the industry standard for residential properties. Appraisers get to know the neighborhoods in which they work. To assure that any effects (positive or negative) of its location will be reflected in the sales comparison analysis, the appraiser should select comparable sales from within the same neighborhood whenever possible. If this is not possible, the appraiser may need to make “neighborhood” or “location” adjustments for any sales that are not subject to this same neighborhood characteristic.

The same is true of other aspects of your Virginia Beach real estate, such as the size, quality and features of the buildings. Differences that the market reacts to are adjusted in the comparable sales to reflect what is present in the “subject” property that is being appraised. If a sold home features a fireplace and the subject does not have one, but the market considers a fireplace to be important, the appraiser make a downward adjustment to the sale price of the comparable sold home because it did have one and the property being appraised does not. The reverse is true when the home being appraised has a feature that other homes that have sold do not have. The basic question is what features are present in a property that buyers are willing to pay extra to get, or will pay less if it they are not there? When differences exist, the appraiser must determine how much a typical buyer will add or deduct for it.

The Income Approach

This technique is typically used in appraising income-producing properties. It is a technique whereby the gross or net income of an income producing property is capitalized at a rate which provides a return of interest on the money invested and a recapture of the capital investment in the improvement over a reasonable term of the investment. Capitalization is accomplished for simple residential properties such as rented homes or duplexes by the use of a Gross Rent Multiplier. This involves multiplying the total monthly rent of a property times a number (GRM) found by dividing the sale prices of similar properties by their monthly rents. Commercial and industrial properties involve more complex formulas to determine their value in the income approach, such as cash flow analysis.

What’s your Virginia Beach real estate worth?

Be Credit Savvy When Buying Virginia Beach Real Estate

What is a credit score?

A credit score is a number that helps lenders predict how likely you are to make your payments on time. This score affects your ability to obtain credit and helps determine what you pay for credit cards, auto loans, and mortgages on Virginia Beach real estate. Even your insurance rate is related to your score. The higher your score, often referred to as a FICO score, the more apt you are to be approved for and pay a lower interest rate on new loans.

What do the numbers mean?

FICO scores range from 300 to 850, with most people scoring in the 600s and 700s, and are generally rated from excellent to very bad.

• Above 800 is considered excellent. This rating reflects that fact that you pay bills on time, have a strong credit history, and have not filed for bankruptcy. You use your credit responsibly.

• Between 750 and 800 falls into the very good category. You are considered a very low risk because of your history of paying bills on time and acting responsibly.

• Between 700 and 750 puts you in the low risk range. You my have missed some payments in the past, but you current record is good. You do not have an excessive amount of credit card debt.

• Between 650 and 700, or fair, means you are a moderate risk. Your credit history may include older negative items, too many recent applications for new credit, or a higher than normal credit card debt.
  

• Between 600 and 650 is a bad score, and you are deemed a high risk for purchasing Virginia Beach real estate. Your score most likely reflects high credit card debt, late payments, collections, or bankruptcy, and you may well be turned down for new credit.

• Below 600 is considered very bad, and you are viewed as a very high credit risk. If you are approved at all, it will be at a much high interest rate–or you may even need a cosigner or a very large down payment in order to secure a loan.

Because you have not yet established a credit history due to lack of credit cards and/or loans, you may have no credit score. Opening a new credit card account and using it responsibly for a few months should alleviate this problem.

What makes up the credit score?

Your payment history comprises 35% of the score, with the amount of debt you have affects about 30%. 15% of the score is derived from the length of your credit history, with 10% resulting from recent new credit applications. Other factors such a s a variety of credit types make up the final 10%.

How can you improve your score?

• Use you credit cards to establish a positive and consistent pattern of payment.

• Check your credit report for inaccuracies. This is a common problem, so look for and report misinformation.

• Have a variety of debt. In addition to a mortgage on your Virginia Beach real estate, add auto loans and credit cards to the mix. It is important to demonstrate good money management in more than one area.

The three major credit reporting agencies are Equifax, Experian, and Transunion. You are entitled to one free credit report a year from each of the three.

Choosing An Agent for Your Virginia Beach Real Estate

One of the most complex and significant events in people?s lives is the purchase or sale of their real estate–and most people turn to an agent to assist them in these transactions. Before you select a professional real estate agent, however, you should determine if he/she is qualified to handle your Virginia Beach real estate business, what he actually does, and how he is paid.

REQUIREMENTS: All real estate brokers and sales agents must be licensed by their state. Although the rules and regulations of individual states vary, most require educational courses, a written examination, and license renewal every 1 or 2 years. Usually between 30 and 90 hours of formal coursework are required in topics such as real estate principles, contracts, and ethics to ensure that the agent has a thorough knowledge of the fundamentals and legal aspects of the field. Many states also have a continuing education requirement. In addition, many agents are members of the National Association of Realtors, an organization designed to provide an exchange of ideas to improve the industry as needed in order to protect the consumer and provide quality service.

SERVICES PROVIDED: A good agent wears many hats and is knowledgeable about many aspects of real estate. An agent handling your Virginia Beach real estate business should:

• be familiar with your target area

• represent a buyer or seller in the purchase or sale of real estate

• search for suitable buyers and/or properties

• assist in procuring financing for your Virginia Beach real estate
  

• examine comparable sales to determine fair market value

• ensure that all terms of the contract are met

QUALITIES TO LOOK FOR: You will want someone who:

• is organized

• is knowledgeable about the business

• is confident in his abilities

• is skilled in negotiations, contracts, and financing

• acts in your best interest

• is ethical and trustworthy

• maintains confidentiality

• is open in disclosing pertinent facts

HOW THE AGENT IS PAID: Since all agents work with a broker, they are paid a portion of the sales commission (commonly paid by the seller). Percentage divisions of the commission vary, but often office costs, such as advertising, are deducted from the agreed upon amount. Neither the buyer nor the seller pays the agent directly.

It is important that you choose a real estate agent wisely and that you establish and maintain a good working relationship with him/her. Carefully check credentials, ask about services provided, and determine his familiarity and success in the area before signing any agreement.

More Energy Saving Tips for Your Virginia Beach Home

Making energy saving changes in the kitchen of your Virginia Beach home is really easy. Consider these simple cooking tips.

Energy Saving Cookware:

• Match the pan size to the size of the element on your electric cook-top. Make sure the pan covers the burner without going more than an inch beyond it. If you use a burner that is larger than the pan, you are paying to heat not just the pan but the air over the uncovered part of the burner.
• Clean those metal burner pans under the burners so they are bright and shiny. They’ll reflect the heat better back up to the pan. Cover your pots when you can. The water will boil faster. That’s physics.
• Use the least amount of water you can get away with. It will take less time and energy to bring it to a boil. Use the lowest possible heat setting to keep the water boiling, steaming, simmering, or whatever your recipe calls for.
• If you have an electric cook-top in your Virginia Beach home, turn the burner off right before you finish cooking. Make use of the heat the burner continues to give off as it cools down.

More Energy Savers:

• The flame on your gas burner should be blue. A yellow flame means the gas is not burning efficiently. Call the gas company to check it.
• Defrost frozen food in the refrigerator before cooking. None of that “just run it under warm water until its ready.” That wastes hot water.
• Preheat the oven in your Virginia Beach home the minimum amount of time. In fact, while breads and pastries need a preheated oven other foods may not.
• Turn on the oven light and look through the window in the door instead of opening the door to check if the food is done. Every time you open that door it takes the food longer to finish and you waste heat that the oven worked hard to make. For the same reason, don’t peak under the lids on the stove-top.
• Don’t put foil on the racks or block the flow of air in your oven any other way. To keep that air flowing, stagger pans on the upper and lower racks if you are using more than one pan at a time.
• Don’t overcook food. Set a timer. Use a meat thermometer.
• If you are going to use the self-cleaning feature on your oven (and do you really need to?), start the feature right after you’ve cooked something so the oven starts out already hot. Remember not to use it more than once a month (less if possible). Be sure your ventilation fan is on when cleaning the oven.
• The microwave in your Virginia Beach home will work more efficiently if the inside surfaces are clean.
• It doesn’t take as much energy to reheat food as it does to cook it the first time–particularly if you reheat in the microwave or toaster oven. So cook big portions that give you leftovers you can keep in the fridge or freezer.

Save Energy and Money In The Kitchen Of Your Virginia Beach Home

Save Energy and Money In The Kitchen Of Your Virginia Beach Home

The kitchen in your Virginia Beach home offers multiple ways to improve energy efficiency and reduce utility bills. Although seemingly small steps, the tips offered below are generally free or inexpensive and yet will result in creating a more energy-efficient environment in your home–and on the planet.

APPLIANCES are, of course, the most familiar to us when we consider energy output. True, they are not free or inexpensive, but they can be a real drain on your money if they do not function efficiently. Those that have earned the Energy Star have met the EPA standards for energy-efficiency and are recommended.

Refrigerators account for about 15% of your total electricity bill, but newer models use far less than those manufactured years ago. Consider the size you need when purchasing a new to avoid wasting energy cooling nothing.

Dishwashers offer opportunities to save, too. Run them only when they are full and scrap the dishes prior to washing so that you can use the light or normal wash cycle. Also, set the drying cycle to air dry to say energy.

Microwaves and toaster ovens are good alternatives to the use of a large oven in your Virginia Beach home, especially for smaller meals. You might also look into the use of light ovens (similar to a microwave but browns and roasts like a regular oven), induction cooking (extremely efficient because all the het goes into the food), and solar cookers (free and clean energy for slow cooking).

COOKWARE: Selecting the correct size, shape, and type can also prevent energy waste.

1. Remember to use the smallest pan you need for the dish you are making since smaller pans take less energy to heat up.

2. Put the pan on the burner that fits it best. Make sure the pan covers the burner without going more than an inch beyond it. If the burner is wider than the pan, you are wasting energy. Remember that smaller burners use less electricity.

3. Every type of heating element on an electric cook-top (coils, solid disk elements and radiant elements under ceramic glass) will work significantly more efficiently when the bottom of the pan is flat. In fact, the most efficient pan has a slightly concave bottom, which flattens out when the metal heats up. The more rounded or warped the pan, the less direct contact it has with the burner so the harder the element has to work to heat up the pan. For that reason, those old battered pans from the ’50s you’ve been using may be costing you money.

4. Copper-bottom pans heat up faster than other pans, and those made of cast iron retain heat better than others.

5. The tighter the fit on the pot lid, the less heat escapes.

6. Using glass or ceramic pans in the oven allows you to turn the temperature down about 25 degrees Fahrenheit and still cook the food in the same amount of time.

7. Pressure cookers, which build up steam pressure, reduce both cooking time and energy use.

Stay tuned for part II of Save Energy and Money In The Kitchen Of Your Virginia Beach Home.

Another Tax Credit Extension For Your Virginia Beach Real Estate Purchase

The Home Buyer Tax Credit was set to expire last month, but because of the high number of buyers who purchased homes by the April 30th deadline but were unable to close on their Virginia Beach real estate, Congress has extended the closing date to September 30, 2010. Apparently, the demand to close by June 30^th was greater than expected, thus overwhelming mortgage lenders. In addition, short sales and foreclosure purchases require more time to process, and as their number increased, so did the backlog of closings. The National Association of Realtors estimates that at least 180,000 home buyers were unable to settle by the June deadline and thus missed the opportunity to receive the tax credit.

So what does this mean for you? If you purchased your Virginia Beach real estate by the April 30^th, you now have until September 30^th, 2010, to close on your property. (Note: the new legislation applies only to those who did so. The purchase deadline was not extended.) Other than date changes, the terms of the original program still apply, allowing tax credits of up to $8000 for first-time buyers and $6500 for repeat buyers.

Included in the current bill are special provisions for members of the U.S. military forces, the foreign service, and the intelligence community. For those who fall into these categories and have been ordered on an extended (90 days or more between after December 31, 2008, and before May 1, 2010) tour outside the United States, the new extension allows for a binding contract to be in place on or before April 30, 2011, and a closing to take place on or before June 30, 2011. In addition, a person who is forced to return to the U.S. for medical reasons before completing the 90 day tour may qualify for a one year extension.

What do you need to do to claim the credit for your Virginia Beach real estate purchase on your taxes?

• If your 2009 return has not yet been filed, claim it on Form 1040 for tax-year 2009. While you cannot file this return electronically, you can still use IRS Free File to prepare and print it. When you send it in, you must attach special documentation and IRS Form 5405.

• If you have already filed for 2009, claim the tax credit on an amended return using Form 1040X. Remember to check the above site for specific documents to include with your new return.

You may also wait and claim the credit on your 2010 tax return.

Getting a Home Inspection For Your Virginia Beach Real Estate

So you?ve finally found the piece of  Virginia Beach real estate you?ve searched for months! What next? Before you sign a contract, make sure it contains a home inspection contingency, a clause stating that your offer is contingent dependent on the results of a home inspection.

A home inspection is of primary importance because it allows you to obtain an unbiased professional assessment of all the components of the property. It is a step necessary for you to decide if you will stay with your original offer, renegotiate based on documented issues and needed repairs, or back away from the purchase of that piece of  Virginia Beach real estate altogether.

Selecting a qualified inspector is vital. Your realtor can provide you with the names of reputable firms, or you can go online to research services offered and credentials. Specific information you should know about the inspector and the inspection process included the following:

1. Credentials and background: Is he/she licensed in your state? Is he affiliated with any respected organizations such as the American Society of Home Inspectors? Membership in these groups requires that inspectors follow strict guidelines about ethics and continuing education. Be sure to inquire about experience and training. A construction-based background is a plus, as is attending a college with an emphasis on construction or attending a home inspection school.

2. Fees: Although you don?t want to spend money unnecessarily, this is not a place to scrimp. Your house purchase is a very large investment, and you need to know as much as you can about it. Do remember that money spent on a quality inspection now will be returned to you by avoiding unexpected costly repairs in the future.  The price of an average inspection varies depending on the age, size, and condition of the house. Some inspectors base their fees on the list price of the Virginia Beach real estate. Get estimates from all you contact, but don?t assume that the lowest priced is the best choice for you.

3. Type of report: Some inspectors use computer generated onsite reporting, some a handwritten checklist, and others a computer generated report you won?t receive for few days. By and large, the last option is in your best interests since it gives the inspector time to review his findings, look up any questions he may have, and send you a detailed, descriptive report. He should also be able to provide you with pictures of the problem areas. Feel free to ask him for a sample report.

4. The actual inspection: Make sure that you will be allowed to accompany the inspector and ask questions as he checks out the house and grounds. This is a good time for you to become familiar with the home?s inner workings, locate shut-off valve and breaker panels, and pick up tips on operating and maintaining different systems.

A thorough home inspection of an average home should take between 2 ½ and 4 hours and should cover both internal and external components of the property. Major items examined should include:

a. Siding, foundation, brickwork, etc.

b. Insulation

c. Deck, roof, garage

d. Attic/basement

e. Driveway and walkways

f. Electrical system

g. Plumbing

h. Doors and windows

i. Heater, air conditioner, and hot water heater

j. Ceilings, walls, and moldings

Having your Virginia Beach real estate inspected will allow you to make an informed decision about the purchase of a house and will provide you with both essential knowledge and peace of mind.