Moving expenses

RemodelorMove.com estimates the average cost of moving a typical $200,000 home (Charlotte’s April 2010 average sales price was $201,410, according to the Charlotte Regional Realtors Association), at a staggering $15,000 to $50,000. That includes moving preparation, the actual move, Realtor commissions, upfits and purchases for the new home, and a possible increase of $0 to $10,000 in property taxes.

Fees

That figure doesn’t include seller-paid closing costs, which typically run 3-5% of the sales price.

Hidden issues

While you know what’s in your home, you may be inheriting someone’s problems if there are issues that don’t show up on your new home’s inspection report. If the seller is making repairs, make certain they have been properly completed by a licensed, professional contractor -  electrical, exterior wood, roofing, boxing, siding and subfloor structural issues often won’t become apparent for several months or longer, when the cost to re-repair correctly will come out of your pocket.

Moving disrupts families

You’ll need to pack up personal belongings and keep the house in “ready-to-show” condition to be prepared for prospective buyers.

Moving disrupts networks

In addition to the friends you’ll be leaving behind, there are school, church and social changes that impact the entire family.

You may have to move twice

If you haven’t already located or closed on your new home by the time yours sells, you’ll need a temporary place to stay.

Double jeopardy

If you move before your existing home sells, you’ll need to cover two mortgages for an undetermined period of time.

Quicker than you think

Depending on the scope of the project, here are some surprisingly fast (approximate) construction times for common projects done by a licensed, professional contractor: the average room addition takes five weeks, a complete kitchen remodel 6-8 weeks, and a complete bathroom remodel 4-6 weeks.

Timing is everything

While the housing market is improving, values are not yet back to 2006 levels – which means holding onto your home until the market rebounds may make financial sense.

Solid investment

If planned and executed properly, you may recoup a large portion of your renovation expenses, particularly if you plan to stay in your home for a few years. Remodeling Magazine’s Cost Vs. Value 2009-2010 Southeast report puts recoup rates at 90% for attic bedrooms (mid-range project), 84.4% for basement remodels (mid-range project), 74.6% for a mid-range major kitchen renovation or 64.9% for an upscale version that includes features like granite countertops, 71.9% for a mid-range bathroom remodel or 64.3% for an more upscale bath renovation, and an impressive 146.8% for steel entry door replacement (mid-range project).

When considering those returns as well as all the issues involved in deciding whether to renovate, it’s vital to weigh what award-winning home improvement writer and author Kathy Price-Robinson wrote on her remodeling blog: “If you plan on living in your house for more than five years, you must factor in the quality of life increases as well as the payback on your investment. After all, is it a home where you live and shelter your family, or is it just an investment like a mutual fund?”

As consumers, we place a high level of trust in the professionals who assign a value to our homes. Early in May 2009, the U.S. Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae) adopted new guidelines to assist in accurately and independently determining the value of homes. Enacted in the aftermath of the housing crisis, the Home Valuation Code of Conduct (reprinted at the bottom of this article) was designed, in essence, to prevent lenders or other third parties from unduly influencing the results of the appraisal process.

As is true when you are doing anything new, accurately interpreting the intent of the change and then following the correct procedure to implement it can be a bumpy process.  Some lending companies have incorrectly interpreted the code to mean that they must use the services of appraisal management companies. This can be problematic if their employees are not familiar with local market conditions, or worse yet, are not even based in this state. To help combat home valuation problems that some buyers, sellers, and real estate agents have run up against, the North Carolina Real Estate Commission recently sent this letter to the Federal Housing Finance Agency.  The text of the letter (reprinted below this article) was reprinted in the October 2009 "Carolina Real Estate Commission Real Estate Bulletin."

Before an appraiser determines the value of your home, ask about the four main issues broken out in this letter to achieve the most accurate results: Does the appraiser work for an appraisal management company? If so, is it owned by, controlled by or affiliated with your lender? Is the appraiser state licensed, and will he conform to accepted practices? Is the appraiser familiar with the market, and does he have access to current market data? Asking these few simple questions can have a major impact on one of the most critical aspects of buying, selling or renovating your home.

Home Valuation Code of Conduct

Editor's Note: The recently implemented Home Valuation Code of Conduct is intended to enhance the independence and accuracy of the home appraisal process and provide added protections for homebuyers, mortgage investors and the housing market. In response to complaints from real estate consumers and brokers regarding the Code, the Real Estate Commission has announced its support for legislation requiring appraisal management companies operating in North Carolina to be regulated by the North Carolina Appraisal Board, and it directed that the following letter be sent to the Federal Housing Finance Agency.

September 23, 2009

The Federal Housing Finance Agency

1700 G Street, NW 4th Floor

Washington, DC 20552

Dear Sir or Madam:

To assist your agency in monitoring and evaluating the effectiveness of the Home Valuation Code of Conduct implemented May 1 by the U.S. Federal Home Loan Mortgage Corporation (Freddie Mac) and the Federal National Mortgage Association (Fannie Mae), the North Carolina Real Estate Commission has directed me to share with you its observations and experiences with regard to the Code and to respectfully offer its suggestions for improvement. The Real Estate Commission is a governmental agency charged with protecting the interests of real estate consumers in our State. The Commission recognizes and appreciates your efforts through the Code to address some of the more egregious abuses visited upon the public by the unscrupulous acts of certain mortgage lenders. However, like your agency, we have found when adopting rules and implementing new legislation, some innocent misunderstandings and intentional attempts to exploit ambiguities in them are perhaps unavoidable.

With regard to the Code, prospective homebuyers have complained to us that lenders assert that under "new rules" the lenders must order appraisals through appraisal management companies. We have also received complaints from buyers, sellers and real estate agents that appraisers assigned by such companies to perform the appraisals are not familiar with or sufficiently informed about the real estate market where the property is located to make accurate appraisals. We are, in fact, aware of cases where appraisers have traveled from other states and of cases where appraisers attempted to perform appraisals without consulting MLS sales data. Further, despite the apparent intent of the Code to distance lenders from the appraisal process, we have learned that some lenders own or have an ownership interest in the appraisal management companies they use.

Although the Real Estate Commission does not at this time support a proposed moratorium on the continued implementation of the Code and we are aware that bulletins and other supplemental information about the Code have been published, it recommends for your agency's consideration that the Home Valuation Code of Conduct itself be amended to:

1. Clarify that lenders need not engage appraisal management companies;
2. Prohibit lenders from engaging appraisal management companies which are owned, controlled by, or affiliated with the lender;
3. Expressly require lenders to engage, whether directly or indirectly, appraisers who are state-licensed and that the appraisals performed by such appraisers conform to the minimum requirements of state laws and rules and the Uniform Standards of Professional Appraisal Practice; and
4. Expressly require appraisers who are engaged to perform appraisals to be familiar with the market where the property is located and to have access to and use the best available data for that market in performing the appraisal.

We hope our suggestions are received in the helpful spirit in which they are intended and that you will you not hesitate to contact our office if we can be of any assistance to your agency with this or any related matter.

Sincerely yours,

North Carolina Real Estate Commission

Reprinted from: Real Estate Bulletin October 2009